Greenspan Comes Out with Ideological Guns Blazing: We are more effecient than the Soviets

Things must be getting really hot given that the chairman is down to defending the hard core by nefarious means in the pages of the FT. Inter alia Greenspan claims that it is not possible for central bankers to lean against the prevailing winds. This seems odd given that monetarism and its subsequent incantations was and is entirely premised on the capacity of central bankers to lean against the prevailing winds. It makes me wonder why credibility therefore matters at all, if at the end of the day central bankers are so helpless. The problem is that the evidence suggest the contrary and thus the chairman’s defense seems rather like a put for posterity.

Here is the chairman’s concluding paragraph.

I do have an ideology. So does each member of the forum. I trust our views are subject to the same standards of evidence that apply to all rational discourse. My view of how the efficiency of global capitalism has evolved over the decades as new evidence has appeared contradicts some earlier judgments and confirms others. I have been surprised by the fierceness of investors in retrenching from risk since August. My view of the range of dispersion of outcomes has been shaken but not my judgment that free competitive markets are the unrivalled way to organise economies. We have tried regulation ranging from heavy to central planning. None meaningfully worked. Do we wish to retest the evidence?

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