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Mix-Ansicht- Der gefährlichste und mächtigste Mensch auf diesem Planeten: Greenspan. - Emerald, 29.08.2004, 08:16
Der gefährlichste und mächtigste Mensch auf diesem Planeten: Greenspan.
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August 24, 2004
Alan Greenspan is arguably the most important bureaucrat in the world. I define"bureaucrat" as follows: an unelected, salaried employee of an agency of the civil government, who derives his authority from that government. I understand that the Board of Governors of the Federal Reserve System is quasi-private, but it has the franking privilege: free postage. The 12 regional Federal Reserve banks do not. The members of the Board are appointed by the President. So, in terms of my definition of a bureaucrat, Greenspan meets the criteria.
There is something else worth considering: it is costing Greenspan a fortune to maintain his position. If he were to quit and return to private consulting, where he was back in 1987, he could charge at least $25,000 per speech. He could charge who knows what to clients. He has forfeited this income by remaining at the FED. Only William McChesney Martin, who served as chairman under Truman, Eisenhower, Kennedy, Johnson, and Nixon, served longer. (It was Martin who described the main function of the FED as taking away the punchbowl just as the party is getting rolling. He did not mention that the FED had previously spiked the punch.) So, when you think"bureaucrat," think"Greenspan." He is in Washington as a matter of choice. He is there for reasons other than money.
What reasons are there other than money? The usual trio is"money, sex, and power." I have never heard rumors of his dalliance, and if there were, I am sure they would be reported in detail by NBC's Andrea Mitchell (Mrs. Greenspan). That narrows the selection: power.
There is another goal, which is forever closed to most of us: fame. Greenspan is famous. He is likely to remain famous. When you think of government bureaucrats, except for wartime generals, only one American bureaucrat exceeds Greenspan's fame: J. Edgar Hoover. He died in 1972. (Incredibly, he had the same secretary for 54 years.) But Hoover maintained his power through fear: the legendary FBI files that he controlled. When someone asked Lyndon Johnson why he did not fire Hoover, who had reached what was then the compulsory retirement age of 65, Johnson spoke for every politician in Washington:"I'd rather have him inside the tent pissing out than outside the tent pissing in." No one ever had any doubt that the Director supplied LBJ with information useful in persuading Congressmen and Senators to vote in a particular way or to at least to remain silent.
Greenspan is something else again. His power is applied through a committee, and from there through other committees, moat notably the Federal Open Market Committee (FOMC), which decides to buy or sell U.S. Treasury debt, thereby influencing the money supply and interest rates. His words have the power to move markets.
He gets kidded because of his power to speak without conveying specific information. He even kids himself. In his July 23 testimony to the Senate, he said that when he has trouble going to sleep at night, he reads copies of his old speeches. There is no man who better understands what a sound byte is and how to avoid uttering one. This gains respect. All the players understand that this is part of his strategy to keep markets stable in scary times and rising in good times. On the whole, he is respected.
He is more than respected, I believe. He is regarded as being indispensable. No President has had a bad word to say about him. He has served under four. This is understandable; no President has a bad word to say about any Federal Reserve Chairman or Board member. The only Chairman who was widely known to have been privately asked to resign by a President was G. William Miller, who was in charge briefly under Carter, and took the heat for the era's inflation. He resigned. He was succeeded by Paul Volcker in 1979. Even during the recessions of 1980, 81, and 82, caused by the FED's stable money policies, Volcker was almost immune to criticism.
Volcker was respected because he took the hard road in order to slow the inflation of the 1970's, which accelerated after Nixon unilaterally imposed price and wage controls and also severed the connection between gold and the dollar on August 15, 1971. But Volcker was not regarded as a magician: a man who could make the pain of inflation go away without imposing the pain of recession. In contrast, Greenspan has the reputation of keeping recessions relatively mild and short-lived: 1991 and 2001. The stock market crash of October, 1987, came within days of his confirmation as Chairman. The FED immediately pumped in money, and the one-day crash of 508 points stabilized. That was his baptism of fire. He survived.
Because of the centrality of the American economy, Greenspan is regarded as the indispensable man by foreign central bankers. The dollar is the world's reserve currency. Its value is crucial for oil purchases. When the dollar price of oil rises, countries whose currencies do not appreciate against the dollar must pay higher prices for oil. But countries whose currencies do appreciate against the dollar face domestic political problems: price competition from American producers, who in turn pressure the government to Do Something.
I think it is safe to say that Greenspan is the most important bureaucrat on earth, and is regarded as such by decision-makers and opinion-makers. He has the ability to inflict enormous losses on investors. The world accepts this because people expect him to use this power wisely, meaning to keep the world economy from suffering from disruptions imposed by changes in the value of the dollar.
He is seen as more than a bureaucrat. He cannot be dismissed from his post. He is immune from Presidential power, except when his term runs out. He is seen as the one continuing power behind the throne of American politics, the one man who can privately tell a President to do something politically painful, and whose suggestion will be grudgingly accepted. He is seen as being above American politics -- perhaps the only man with real power who occupies this position. He provides the continuity between Administrations. In this sense, short of wartime powers, Greenspan is the most powerful bureaucrat on earth. He is the only world bureaucrat.
He can be outvoted by the Board. If this ever happens, the public never hears about it in the financial press. The Board is not like the Supreme Court, where factions are widely reported and monitored.
There is a legend, promoted in historical monographs, that Benjamin Strong, the head of the New York Federal Reserve Bank in the 1920's, might have been able to devise a policy that would have avoided the depression of the 1930's. He died in 1928. Alone among economists and economic historians, Murray Rothbard, in America's Great Depression (1963), blamed Strong for adopting the monetary policy of inflation, which led to the 1929 stock market crash. Historians have promoted the idea that Strong somehow possessed both the wisdom and the authority to make the pain go away.
Among Federal Reserve officials, only Alan Greenspan has acquired a similar reputation. This is the problem. He is seen as the magician, or as Bob Woodward dubbed him, the maestro. He is seen as above the law -- the law of politics -- by means of his uncanny ability to apply the laws of economics to the financial markets.
I use the word uncanny advisedly. Greenspan is seen as uniquely gifted in his ability to manipulate markets. The world trusts him to continue to do this. There is no other man on earth who is seen as possessing this ability. Intelligent people believe that he can somehow come up with the proper monetary policy, based on his ability to intuit this policy from reams of data. They believe that no committee and surely no computer can imitate this ability. In this sense, he is seen as a magician -- the alchemist of numbers.
What happens when he retires or drops dead? He is old: 78. I can think of no other man of equal responsibility and influence who is this old. When he dies, the illusion of"the man at the wheel" will be removed.
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