Greenspan's faith in self-regulation always looked different from outside the US. In East Asia, the 1997 financial crisis was still a living memory when he was at peak influence — countries like Thailand and Indonesia saw firsthand what happens when capital flows move faster than regulatory oversight. The irony is that China watched the Greenspan era and drew the opposite lesson: rather than trusting markets to self-correct, the PBOC built a toolkit of direct interventions (window guidance, reserve ratios, capital controls) that would make a Western central banker uncomfortable. Whether that's prudence or overreach depends on your priors, but it's worth remembering that the 'maestro' reputation was always more contested in capitals that had been burned by the assumptions he championed.
I'm not a gold bug but Alan was a proponent of the gold standard. He wrote about how the gold standard created responsible spending and more equality in the world:
The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these chickens will come home to roost in some way or another. But it is hard to predict when.
So he was in favour of the gold standard because it prevented massive unconstrained expansion of credit and that seems sensible.
Tying the ability to increase the money supply to a metal we have to dig out of the ground is ridiculous.
>near unlimited government credit
Really? How do we get some? And, beyond that, what do YOU think the limits should be on increasing the money supply by a sovereign nation?
A nation becomes wealthy by producing things to sell. Nothing else matters, including debt. But, we live in a world where people want to be rich, but also don't want to use resources, or build, or manufacture things, or run an empire. It's contradictory, and we are starting to see the effects.
Gold based money, or eras of coinage, historically have been times of war and slavery. The debt system we are in now is far better in a lot of ways. The outcome of what happens depends on the political will deciding where the credit flows.
I have come around to gold. Money shouldn't be dual purposes, we should apply single responsibility principal. Money should refer to some stable (albeit slightly growing by nature) account of measure.
Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technological progress.
The argument that prices can't get cheaper or [bad thing will happen] was never very convincing to me. Prices already do get cheaper for large swaths of the economy that have technological progress grow faster than money supply. Cell phones are rapidly depreciating. You can wait 6m to a year and get a significant discount on the latest iPhone version. People don't stop buying iPhones, and Apple doesn't stop investing in iPhones. This is even more true w/ AI models. Investors/companies are burning billions to build tech that will only get cheaper and obsolete in years if not months.
So if you were to try to convince me that deflation would reduce investment or spending, tell me why this doesn't apply to tech products that get cheaper every year.
>Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper?
This can only really happen if the rate of efficiency gains consistently out pace resource and labor costs, such that the marginal cost of delivering produce to market is flat or decreases for the farmer over time.
Responsibility is not something that the current market players want to see, whether it be through the gold standard, reasonable interest rates, or any other mechanism. They'll argue that the next big thing is simply too expensive for that sort of constraint.
The gold standard and metalism generally, leads to all kinds of unproductive panics bc the quantity of money can’t wisely be adjusted to the situation. It’s a bad trade off, bc it’s well-known in the literature that inflation-targeting works (and that’s the current world-wide central bank policy since 1991).
There’s no roosting. It’s frog boiling. Every day your money loses value.
That’s why stocks go up, spending goes up and the asset class gets richer. When you peg these to an arbitrary “value” you can see, companies aren’t getting trillions of dollars more efficient, the government isn’t delivering more services and the utility of a business or property hasn’t increased.
> So he was in favour of the gold standard because it prevented massive unconstrained expansion of credit and that seems sensible.
That's because it permanently cripples economies by creating an artificial constraint and pretending it's useful. All it does is create another speculation market in gold and cripple credit markets.
Big picture is credit gives the individual a chance. That occurred in the 80s and since we've have more go from rags to riches than all of history combined.
I hated the system but it's fair. English and the allied forces inherited the western world and nobody was willing to claim it, the king of England gave it to his daughter.
Gold should be revalued but we're entering a phase where America is leaving law and order for law and equity. Essentially WW2 is ending but most never bothered to consider if there's a goal to all the chaos.
It's impossible to talk about the supposed benefit of the Gold Standard without saying that it's a completely arbitrary constraint.
Basing currency on a shiny rock is the stupidest idea ever, that only happens to work because it plays into the worst of human convictions, which is egosim around fraud and debasement of currency.
Gold Standards are like very strong medicine with bad effects.
Notably, they would almost assuredly hold back the economy and cause deflationary traps.
The economy needs a bit more currency as it expands and that's that.
The gold standard makes zero sense. Why should the amount of money the economy needs have any relation to the amount of gold a country holds?
What happens in practice is that you set a conversion rate to account for this, and basically immediately things start to drift further and further out of whack leading to massive distortion. There's a reason the gold standard era was a cycle of big swings of inflation and deflation, with panics, recessions, crashes pretty continually.
It's the same with fixed or pegged exchange rates - you can set it to something reasonable at the start but it will always drift, usually until things are distorted that the system fails. That's why we don't have a gold standard anymore and why fixed exchange rates have all mostly failed and gone away too.
There's just no reason to believe that pegs to commodities or other currencies would ever correspond to the amount of money that the economy needs to be in circulation, so they always fail.
Margaret Thatcher said "The problem with socialism is that you eventually run out of other people's money."
I feel like the problem that Greenspan, Bernanke, and friends have found is that the problem with capitalism is that you never run out of the government's money.
Mostly I just know Alan Greenspan for being a disciple of Ayn Rand back in the 1950s/60s. Though the Objectivists didn't like his work at the federal reserve. In 2008 he admits to being shocked that banks weren't rationally selfish.
The libertarian community really thought they had their fox in the hen house when he was put in charge of regulation, and he did a fair bit of deregulation, but not nearly to the extent that they wanted. In the end it was enough to trigger a major financial crisis, but not enough to completely collapse the world economy and return to the feudalism they wanted.
The guy who called the Federal Reserve the "penny in the fuse box" of the economy was not an "Ayn Rand disciple" by the time he took the chairmanship. Power as chair of the Council of Economic Advisers under Ford really transformed him and I think severed the tenuous hold he had on her principles.
IIRC it was Greenspan that didn’t mean to, but did disclose the use of gold swaps, so even if there is all the gold that is claimed to be in Fort Knox, the question of who owns the gold is unanswered.
When I was in high school in the 90s, and just discovering the world of money and finance, I stumbled on Alan Greenspan and instantly liked some of his thinking about it. I tried my best to learn from everything he did, read every news article I could find, followed rates, the economics of money, the impact on markets, and more. I learned more about government politics and money and influence from that experience than I have since! I'll admit that my mindset about the Fed and money in general is very much due to what I learned in those impressionable years.
Greenspan was also the subject in the weird comics "h4x0r economist"/"haxor economist", which thankfully still live on since its early internet days https://www.rdwarf.com/users/kioh/ (NSFW language)
Interesting bit of trivia, Greenspan was in Ayn Rand's inner circle and read her drafts of Atlas Shrugged as it was being written, and they were close friends until her death.
Revisionist history will tell it differently, but I remember that from the mid 1990s until about 2000 when the economy was booming yet prices weren't rising, Greenspan publicly indicated that he wasn't sure exactly why that was. Or at least that the information economy had different performance characteristics than the industrial economy, since production wasn't limited by supply but by worker productivity multipliers.
Why did the cost of living decrease in the 90s but not today? What was different then vs now? Well, after the Dot Bomb and 9/11, the US hasn't followed macroeconomic principles (the main principle being to raise interest rates during increased production to prevent inflation), examine the flip after 2000:
Note that policy had a greater effect on US economic decline than who the Fed chair was. Specifically, the Gramm-Leach-Bliley Act (GLBA) known as the Financial Services Modernization Act of 1999 (which reversed the Glass–Steagall Act of 1933 and removed barriers in the market among banking companies, securities companies, and insurance companies) allowed investors to gamble with our savings again like before the Great Depression:
The Housing Bubble popped less than a decade later in 2008.
The Telecommunications Act of 1996 had deregulated the information economy, cementing the duopolies we see today, although the fallout from that arguably wasn't felt until after the arrival of fast mobile internet that coincided with the 2008 financial crisis, which contributed to the high communications prices we pay today vs the rest of the world (imposing a kind of privatized tax on the information economy):
What I saw then was the last hurrah of US colonialism, which patterned itself off of England but used proxy wars instead of direct colonization. Loosely, keeping Asia down supported western antisocialist goals while simultaneously bolstering capitalist economies. In other words, buying shoes for $5 and selling them for $100 (times everything) allowed the US to transition from blue collar to white collar work.
That resulted in the US closing 100,000 factories under the GW Bush administration of the 2000s. And also outsourcing to China and India, the reduction of pure R&D to almost nothing, massive investment in McMansions and SUVs instead of something like renewable energy, and of course diverting perhaps $3 trillion or more to forever wars in the Middle East to prop up the declining industrial economy which depends on fossil fuels.
That's all changing now as China's buying power is passing that of the US:
Highly recommend the extremely good multipart documentary All Watched Over By Machines Of Loving Grace by Adam Curtis for a fun and wide ranging if slightly silly look at the nexus of Greenspan, Ayn Rand, Silicon Valley, computer technology etc
Texas Senator Phil Gramm (pretty sure it was him) was a prominent GOP member of the Senate Banking Committee. Of course, Greenspan often testified there.
Gramm would always ask Greenspan, along with his other questions, “Mr. Chairman, what’s the ideal capital gains tax rate?”
Greenspan never missed a beat: “Zero.”
Agree or disagree, you always knew where he stood!
> Agree or disagree, you always knew where he stood!
This is always such a weird phrasing to me. We collectively praise politicians for this (and admittedly, many of them will just say anything to get elected), but the phrase discourages the idea that learning and changing your mind is valuable.
(Not trying to single you out, just writing about how we collectively do this. I'm sure I've done it in the past.)
This is the guy who told everyone to save money by buying property with ARMs and then, post crash, admitted to congress that there a flaw in his economic theory. No shit.
50 comments
[ 0.24 ms ] story [ 39.3 ms ] threadhttps://ritholtz.com/2008/11/gold-and-economic-freedom-by-al...
The world we are in now, especially in the US, is one where there is near unlimited government credit but it is, according to many, papering over deep structural problems. At some point, these chickens will come home to roost in some way or another. But it is hard to predict when.
So he was in favour of the gold standard because it prevented massive unconstrained expansion of credit and that seems sensible.
>near unlimited government credit
Really? How do we get some? And, beyond that, what do YOU think the limits should be on increasing the money supply by a sovereign nation?
A nation becomes wealthy by producing things to sell. Nothing else matters, including debt. But, we live in a world where people want to be rich, but also don't want to use resources, or build, or manufacture things, or run an empire. It's contradictory, and we are starting to see the effects.
Prices should get cheaper. That's a progress dividend. We get better at growing food every year, why shouldn't food get cheaper? Imagine a world in which prices regularly go down. You're a passive beneficiary of technological progress.
The argument that prices can't get cheaper or [bad thing will happen] was never very convincing to me. Prices already do get cheaper for large swaths of the economy that have technological progress grow faster than money supply. Cell phones are rapidly depreciating. You can wait 6m to a year and get a significant discount on the latest iPhone version. People don't stop buying iPhones, and Apple doesn't stop investing in iPhones. This is even more true w/ AI models. Investors/companies are burning billions to build tech that will only get cheaper and obsolete in years if not months.
So if you were to try to convince me that deflation would reduce investment or spending, tell me why this doesn't apply to tech products that get cheaper every year.
This can only really happen if the rate of efficiency gains consistently out pace resource and labor costs, such that the marginal cost of delivering produce to market is flat or decreases for the farmer over time.
As I understand it, all the gold that has ever been mined would fit in a cube the size of a baseball diamond.
https://www.businessinsider.com/warren-buffetts-lesson-on-go...
Nixon was responsible for ending the silver standard.
https://www.usmoneyreserve.com/news/executive-insights/when-...
https://en.wikipedia.org/wiki/Silver_standard#United_States
That’s why stocks go up, spending goes up and the asset class gets richer. When you peg these to an arbitrary “value” you can see, companies aren’t getting trillions of dollars more efficient, the government isn’t delivering more services and the utility of a business or property hasn’t increased.
It's worth reading all of them, even if you disagree with most of it.
That's because it permanently cripples economies by creating an artificial constraint and pretending it's useful. All it does is create another speculation market in gold and cripple credit markets.
I hated the system but it's fair. English and the allied forces inherited the western world and nobody was willing to claim it, the king of England gave it to his daughter.
Gold should be revalued but we're entering a phase where America is leaving law and order for law and equity. Essentially WW2 is ending but most never bothered to consider if there's a goal to all the chaos.
Basing currency on a shiny rock is the stupidest idea ever, that only happens to work because it plays into the worst of human convictions, which is egosim around fraud and debasement of currency.
Gold Standards are like very strong medicine with bad effects.
Notably, they would almost assuredly hold back the economy and cause deflationary traps.
The economy needs a bit more currency as it expands and that's that.
What happens in practice is that you set a conversion rate to account for this, and basically immediately things start to drift further and further out of whack leading to massive distortion. There's a reason the gold standard era was a cycle of big swings of inflation and deflation, with panics, recessions, crashes pretty continually.
It's the same with fixed or pegged exchange rates - you can set it to something reasonable at the start but it will always drift, usually until things are distorted that the system fails. That's why we don't have a gold standard anymore and why fixed exchange rates have all mostly failed and gone away too.
There's just no reason to believe that pegs to commodities or other currencies would ever correspond to the amount of money that the economy needs to be in circulation, so they always fail.
I feel like the problem that Greenspan, Bernanke, and friends have found is that the problem with capitalism is that you never run out of the government's money.
I've always wondered if part of the 2008 bust was a psyop from his Ayn Rand beliefs.
It probably wasn't as damaging to the world as the Friedman doctrine but it was pretty darn close.
https://youtu.be/DNCZHAQnfGU?is=CWQS-QUJB0z4EfSM
Alan Greenspan, Fed Chairman Through Prosperity and Crisis, Dies at 100
non-paywall: https://www.nytimes.com/2026/06/22/us/alan-greenspan-dead.ht...
Why did the cost of living decrease in the 90s but not today? What was different then vs now? Well, after the Dot Bomb and 9/11, the US hasn't followed macroeconomic principles (the main principle being to raise interest rates during increased production to prevent inflation), examine the flip after 2000:
https://www.linkedin.com/posts/richard-clarida-085777125_wea...
Breadcrumbs:
https://financialpost.com/news/alan-greenspan-dies-at-100 (alternative article)
https://www.federalreserve.gov/boarddocs/speeches/1999/19990... (example speech)
https://www.dallasfed.org/~/media/documents/research/swe/200... (analysis pdf)
Note that policy had a greater effect on US economic decline than who the Fed chair was. Specifically, the Gramm-Leach-Bliley Act (GLBA) known as the Financial Services Modernization Act of 1999 (which reversed the Glass–Steagall Act of 1933 and removed barriers in the market among banking companies, securities companies, and insurance companies) allowed investors to gamble with our savings again like before the Great Depression:
https://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
The Housing Bubble popped less than a decade later in 2008.
The Telecommunications Act of 1996 had deregulated the information economy, cementing the duopolies we see today, although the fallout from that arguably wasn't felt until after the arrival of fast mobile internet that coincided with the 2008 financial crisis, which contributed to the high communications prices we pay today vs the rest of the world (imposing a kind of privatized tax on the information economy):
https://en.wikipedia.org/wiki/Telecommunications_Act_of_1996
What I saw then was the last hurrah of US colonialism, which patterned itself off of England but used proxy wars instead of direct colonization. Loosely, keeping Asia down supported western antisocialist goals while simultaneously bolstering capitalist economies. In other words, buying shoes for $5 and selling them for $100 (times everything) allowed the US to transition from blue collar to white collar work.
That resulted in the US closing 100,000 factories under the GW Bush administration of the 2000s. And also outsourcing to China and India, the reduction of pure R&D to almost nothing, massive investment in McMansions and SUVs instead of something like renewable energy, and of course diverting perhaps $3 trillion or more to forever wars in the Middle East to prop up the declining industrial economy which depends on fossil fuels.
That's all changing now as China's buying power is passing that of the US:
Texas Senator Phil Gramm (pretty sure it was him) was a prominent GOP member of the Senate Banking Committee. Of course, Greenspan often testified there.
Gramm would always ask Greenspan, along with his other questions, “Mr. Chairman, what’s the ideal capital gains tax rate?”
Greenspan never missed a beat: “Zero.”
Agree or disagree, you always knew where he stood!
This is always such a weird phrasing to me. We collectively praise politicians for this (and admittedly, many of them will just say anything to get elected), but the phrase discourages the idea that learning and changing your mind is valuable.
(Not trying to single you out, just writing about how we collectively do this. I'm sure I've done it in the past.)