Zitiert aus 2tfme13 von Vern Lyon,
http://www.aros.net/~vlyon/ bzw.
ftp://ftp.aros.net/pub/users/vlyon/2tfme12.txt

...
There is one economist, however, that has attained enormous
prestige, and this economist is Alan Greenspan. The respect for
Greenspan, however, is not quite universal. There are still some
individuals who prefer to get their economics tutoring from
sources other than journalists. Victor Niederhoffer, Ph.D.,
perhaps because he ignores all journalists except those who write
for the National Enquirer has not become swayed of Greenspan's
greatness. In some barbed comments in reference to the Fed's role
as a modern Delphic Oracle, Niederhoffer in his insightful recent
book, The Education of a Speculator (1997), says the following:

No discussion of Delphic utterances would be complete without
an analysis of the Federal Reserve, the institution that most
clearly rivals Delphi in its prestige and influence.
...
The only problem in analyzing the Fed is that to analyze the
correspondences, the divergences, and the underlying principles
adequately would require a Ph.D. dissertation, or at least an
all-but-dissertation, the modal degree of the Fed staff -- a
status"Dr." Alan Greenspan mysteriously graduated from when he
assumed the chairmanship at the age of 62. As far as I know, no
one has ever seen or read Greenspan's dissertation [pp. 66-67].

Maybe the ambiguity about Greenspan's academic credentials is the
reason the Nobel awards committee has overlooked Greenspan in
awarding the most prestigious award a scientist can receive.
Since this award is not awarded posthumously, they had better
hurry up.

I have on several occasion in TFME expressed my opinion that the
prestige Greenspan enjoys is not so much from his personal
qualities, and certainly not from his intellect, but from the
power that comes with his job. Faith in Alan Greenspan or the Fed
in general depends on the power that it has to plug the leaks
that are bound to occur from time to time in the highly
leveraged, and hence vulnerable, financial system. The source of
this power and prestige can best be understood if we play police
detective and follow the money.
...


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Zitiert aus 2tfme13 von Vern Lyon,
http://www.aros.net/~vlyon/ bzw.
ftp://ftp.aros.net/pub/users/vlyon/2tfme12.txt

...
Leo Melamed, who was chairman of the Chicago Mercantile Exchange
at the time, in his Escape to the Futures (1996) relates how
just before midnight on the day of the Stock Market crash on
October 19, 1987 he received many phone calls from Washington
politicians and officials. One of these calls was from Fed
chairman Alan Greenspan. Later reflecting on this Washington
attention Melamed understood it to mean that the Chicago
Mercantile Exchange had attained respectability and was
considered a major player on the American financial scene.
Melamed describes his conversation with Greenspan as follows:

With sweating hands, I returned Greenspan's call first. We had
known each other many years, ever since he supported my plans
to introduce Treasury bill futures in 1976. He knew I had great
admiration for him because just before hid Fed appointment as
chairman, I had invited him to sit as a director of the Merc.
Alas, he had bigger things in mind. during the course of
October 19, on more than one occasion, I silently thanked the
Lord that he was in charge at the Fed rather than a director at
the CME. I had little doubt that someone of lesser competence
might not have been up to the challenge at this critical moment
in our nation's history. Greenspan's voice was calm, conveying
to me the impression that things would be all right. His first
question, however, revealed the true danger of the situation.

"Will you open tomorrow morning?" he asked, both of us
understanding that this was the most crucial question [p. 359].

Whether the Merc could open depended on whether at this hectic
time the variation margin from the losers, in this case the
longs, would be deposited with the Merc's clearinghouse to pay
the shorts in time for the nest mornings scheduled opening. If
not the Merc could not open, and that would have been a
frightening event to the world's financial community. So what the
calm Mr. Greenspan was implying is that he would do what he
could, which being the chairman of a very profitable institution,
amounted to plenty, to ensure that the Merc would be able to
open.

There are many reason's why the Merc's accounts would not be
settled in time. Everything from massive bankruptcies to over
loaded wire transfer facilities. This last possibility can be
used to illustrate how knowledge of futures market practice can
shed light on economic theory -- specifically the quantity
theory.
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Zitiert aus 2tfme23 von Vern Lyon,
http://www.aros.net/~vlyon/ bzw.
ftp://ftp.aros.net/pub/users/vlyon/2tfme12.txt
...
III. Failed Forecaster Finally Gets it Right

I have previously mentioned in TFME that if one can manipulate
the market then one can predict it. I did this in the context of
discussing the role of competition and the Efficient market
Hypothesis by using the example of the attempt to manipulate the
copper market by a Mr. Hamanaka of the Sumitomo Corporation of
Japan. Unfortunately for Sumitomo Mr. Copper, as he was known in
the copper trade failed big time in his manipulation of the
copper market and ended up costing his firm many millions of
dollars as the forces of competition were too much for Sumitomo's
highly leveraged copper positions to withstand a significant
adverse move.

What is interesting is that there is another big operator in the
financial markets whose prestige is more like that of Mr. God,
rather than Mr. Copper. This individual is considered to be such
a wizard with the numbers that even when he, to quote Murray
Rothbard,"is a nerd with the charisma of a wet mackerel, [and
when he speaks he] drones on in an uninspired monotone," he is
considered an economic genius. This individual is none other than
Alan Greenspan, the chairman of the Federal Reserve Board.

Interestingly it turns out that when Greenspan was trying to make
it in the competitive private sector that he was a failure and as
many economists before him have done he decided to go into the
political business, of which he has been an amazing success.

I remember when he had an economic consulting firm, but the only
reason I knew this is that his political success brought him to
my attention, and reporters would often refer to him as a
principle in the prestigious Wall Street consulting firm of
Townsend-Greenspan. However, the firm might have been
prestigious, it was a failure as far as providing competent
economic forecasts. The late Professor Murray Rothbard, who knew
Greenspan over 30 years ago when they were both members of Ayn
Rand's cult in New York City wrote the following, which is
consistent with what I remember from my following Greenspan's
career as just an interested economist. Rothbard wrote this in
1987 upon Greenspan's being appointed chairman of the Fed.

The press is resounding with acclaim for the accession to Power
of Alan Greenspan as chairman of the Fed; economists from
right, left, and center weigh in with hosannas for Alan's
greatness, acumen, and unparalleled insights into the
"numbers."
...
The astute observer might feel that anyone accorded such
unanimous applause from the Establishment couldn't be all good,
and in this case he would be right on the mark. I knew Alan
thirty years ago, and have followed his career with interest
ever since.

I found particularly remarkable the recent statements in the
press that Greenspan's economic consulting firm of Townsend-
Greenspan might go under, because it turns out that what the
firm REALLY sells is not its econometric forecasting models, or
its famous numbers, but Greenspan himself, and his gift for
saying absolutely nothing at great length and in a rococo
syntax with no clearcut position of any kind.

As to his emergence as a forecaster, he ruefully admitted that
a pension-fund managing firm he founded a few years ago just
folded for lack of ability to apply the forecasting where it
counted: when investment funds were on the line. [p. 293,
Making Economic Sense, Auburn, Alabama, 1995].

Now that Greenspan is Fed chairman he has the help of innumerable
Fed economists is"divining" the numbers, but when Nobel
laureates, such as Milton Friedman, are unable to accurately
predict future economic conditions, it is more likely that
Greenspan's great competence lies in another area, and in fact
might have more to do with being Fed chairman than in being Alan
Greenspan, although the fact that Greenspan takes himself
seriously as a forecaster certainly adds to his"usefulness."
However, it is the fact that the Fed is the monopoly supplier of
(high powered) money into the market system that makes Greenspan
such a powerful individual.

IV, Politics and Central Banking

Having a central (monopoly) bank control the supply of money,
however, is not the only way to"run" a market economy. Today
there is even significant academic discussion of what is called
"Free Banking," where banking is treated like any other business,
and while the United States' monetary history shows many periods
of monetary instability this did not prevent the US from
achieving great economic success prior to the formation of the
Fed in 1913.
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findet man in 1tfme29 von Vern Lyon,
ftp://ftp.aros.net/pub/users/vlyon/1tfme29.txt

( http://www.aros.net/~vlyon/ )


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Zitiert aus 4tfme03 von Vern Lyon,
http://www.aros.net/~vlyon/

...
V. Conclusion
The first draft of this essay contained a section elaborating on some of the arguments I presented in TFME in the essay, The Money Factory. I decided to omit it because of the simple fact that, as the quotation from Ludwig von Mises at the head this essay indicates, it doesn't much matter what the economists say. As long as there are individuals who have power, and who benefit from an increase in the money supply, it will increase. If"Dr." Greenspan didn't go along, he would be replaced. It is as simple as that. Only under the most drastic conditions, no IMF, Fed, or other governmental agency to provide the money cure, do statesmen (?) turn to the hard choice of practicing economy. Normally practicing economy is for suckers and those who advocate it, such as non-Keynesian economists. Power exists! Live with it!
...

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