Alan Greenspan

"Seit ich Notenbanker geworden bin, habe ich gelernt, in großer Zusammenhanglosigkeit zu murmeln. Wenn ich Ihnen über Gebühr klar erscheine, müssen Sie falsch verstanden haben, was ich gesagt habe."

"Zunächst, lasst uns darüber im Klaren sein, dass es sich hier um ein Ereignis handelt, das einmal in einem halben Jahrhundert, vielleicht einmal in einem Jahrhundert auftritt."

"Wenn sie zu groß sind, um Bankrott zu gehen, sind sie zu groß. ... In 1911 zerschlugen wir Standard Oil. Na, und was passierte? Die einzelnen Teile wurden wertvoller als das Ganze. Kann sein, dass es das ist, was wir brauchen."

"Gold ist eine Währung. Es ist immer noch – nach allen Belegen – die Premiumwährung, wobei keine Fiat-Währung, inklusive des Dollars, ihr gleich kommt."

"Once stock prices reach the point at which it is hard to value them by logical methodology, stocks will be bought as they were in the late 1920s not for investment but to be unloaded at a still higher price. The ensuing break could be disastrous because panic psychology cannot be summarily altered or reversed by easing money policies."

"The world of antitrust is reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet "too much" competition is condemned as "cutthroat." It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as "enlightened" when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict—after the fact."

"Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear."

"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense—perhaps more clearly and subtly than many consistent defenders of laissez-faire—that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other."

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves."

"We are obviously all hurt by inflation. Everybody is hurt by inflation. If you really wanted to examine who percentage-wise is hurt the most in their incomes, it is the Wall Street brokers. I mean their incomes have gone down the most."

"Since becoming a central banker, I have learned to mumble with great incoherence. If I seem unduly clear to you, you must have misunderstood what I said."

"I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I said."

"Clearly, sustained low inflation implies less uncertainty about the future, and lower risk premiums imply higher prices of stocks and other earning assets.… But how do we know when irrational exuberance has unduly escalated asset values, which then become subject to unexpected and prolonged contractions as they have in Japan over the past decade?"

"For some, the benign inflation outcome of 1996 might be considered surprising, as resource utilization rates--particularly of labor--were in the neighborhood of those that historically have been associated with building inflation pressures. To be sure, an acceleration in nominal labor compensation, especially its wage component, became evident over the past year. But the rate of pay increase still was markedly less than historical relationships with labor market conditions would have predicted. Atypical restraint on compensation increases has been evident for a few years now and appears to be mainly the consequence of greater worker insecurity. In 1991, at the bottom of the recession, a survey of workers at large firms by International Survey Research Corporation indicated that 25 percent feared being laid off. In 1996, despite the sharply lower unemployment rate and the tighter labor market, the same survey organization found that 46 percent were fearful of a job layoff."

"Nor can private counterparties restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise."

"The reason there is very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue."

"It hardly makes any difference who will be the next president. The world is governed by market forces."

"Intensive research in recent years into the sources of economic growth among both developing and developed nations generally point to a number of important factors: the state of knowledge and skill of a population; the degree of control over indigenous natural resources; the quality of a country's legal system, particularly a strong commitment to a rule of law and protection of property rights; and yes, the extent of a country's openness to trade with the rest of the world. For the United States, arguably the most important factor is the type of rule of law under which economic activity takes place. When asked abroad why the United States has become the most prosperous large economy in the world, I respond, with only mild exaggeration, that our forefathers wrote a constitution and set in motion a system of laws that protects individual rights, especially the right to own property. Nonetheless, the degree of state protection is sometimes in dispute. But by and large, secure property rights are almost universally accepted by Americans as a critical pillar of our economy. While the right of property in the abstract is generally uncontested in all societies embracing democratic market capitalism, different degrees of property protection do apparently foster different economic incentives and outcomes."

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage."

"Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged this position by now obviously is desirous of losing money."

"While local economies may experience significant price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity."

"Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern."

"A decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market financed withdrawals of home equity in recent years."

"[There are] signs of froth in some local markets where home prices seem to have risen to unsustainable levels."

"That said, there can be little doubt that exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices. Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels."

"The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the Congressional Budget Office, will rise significantly as the baby boomers start to retire in 2008. Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances."

"History has not dealt kindly with the aftermath of protracted periods of low risk premiums."

"If you get beyond the political rhetoric [and assembled a group to solve Social Security] it would take them 15 minutes. It would take them 15 minutes only because 10 minutes was used for pleasantries."

"I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk."

"I really didn't get it until very late in 2005 and 2006."

"We had a bubble in housing."

"Well, first of all, the Federal Reserve is an independent agency, and that means, basically, that there is no other agency of government which can overrule actions that we take. So long as that is in place and there is no evidence that the administration or the Congress or anybody else is requesting that we do things other than what we think is the appropriate thing, then what the relationships are don't, frankly, matter. And I've had very good relationships with presidents."

"I think Bill Clinton was the best Republican president we've had in a while."

"Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this."

"Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity – myself especially – are in a state of shocked disbelief."

"Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact."

"The need for values is inbred. Their content is not."

"Modern dynamic economies do not stay still long enough to allow for an accurate reading of their underlying structures."

"It did not go without notice that Ayn Rand stood beside me as I took the oath of office in the presence of President Ford in the Oval Office. Ayn Rand and I remained close until she died in 1982, and I'm grateful for the influence she had on my life. I was intellectually limited until I met her."

"It's hard to overemphasize how important Ford's deregulation was. True, most of the benefits took years to unfold-rail freight rates, for example hardly budged at first. Yet deregulation set the stage for an enormous wave of creative destruction in the 1980s:..."

"Treasury Secretary Brady didn't like the Fed either. He and the president were friends and had a lot in common-both were wealthy, Yale educated patricians and members of Skull and Bones."

"We generally did not talk about the stock market very much at the Fed."

"Of course, shedding the debt burden would be a happy development for our country, but it would nevertheless pose a big dilemma for the Fed. Our primary lever of monetary policy was buying and selling treasury securities-Uncle Sam's IOU's. But as the debt was paid down, those securities would grow scarce, leaving the Fed in need of a new set of assets to effect monetary policy."

"I came to a stark realization: chronic surpluses could be almost as destabilizing as chronic deficits."

"Globalization was exerting a dis-inflationary impact."

"When trust is lost, a nation's ability to transact business is palpably undermined."

"The Fabians laid the groundwork for modern social democracy, and their influence on the world would end up being at least as powerful as that of Marx."

"In general, corruption tends to exist whenever governments have favors to extend, or something to sell."

"Over the years I have had the most contact with Lee Kuan Yew, most recently in 2006, and have always found him impressive, even though we do not always see eye to eye. I met him first when he was George Shultz's guest at the famous (or infamous, depending on your perspective) Bohemian Grove, a male only bonding retreat among the redwoods of California."

"An area in which more rather than less government involvement is needed, in my judgment, is the rooting out of fraud. It is the bane of any market system."

"The probability of ten consecutive heads is 0.1 percent; thus, when you have millions of coin tossers, or investors, in the end there will be thousands of very successful practitioners of coin tossing, or stock picking."

"From the development of the textile loom two centuries ago to today's Internet, output per hour has increased fifty fold."

"Much of the securitization took the form of collateralized debt obligations (CDOs) with senior credit tranches certified by rating agencies as AAA. It was the failure to properly price such risky assets that characterized the crisis."

"We are going through a period with no precedent in American history."

"I know you think you understand what you thought I said, but I'm not sure you realize that what you heard is not what I meant"

"I got to know a lot of people on Wall Street. I used to tell then that Alan Greenspan was a musician. He was at Juilliard when I was there, a clarinet major, and he played in the Henry Jerome Band at the . After he became chairman of the Fed, Time had his picture on the cover, and inside they had a picture of him with the Edison Hotel band. One of the guys said, "I don't understand something. Why did Greenspan give up the music business, to become an economist?" "Very simple," I told him, "you should have heard him play the clarinet.""

"If you look at the speeches he gave just before he left the Fed, it's pretty much “After me - the Deluge. I'm getting out while my reputation's intact”."

"If you want a simple model for predicting the unemployment rate in the United States over the next few years, here it is: It will be what Greenspan wants it to be, plus or minus a random error reflecting the fact that he is not quite God."

"Greenspan doesn't get out of bed before examining the political consequences."

"I would not only reappoint Mr. Greenspan -- if Mr. Greenspan should happen to die, God forbid -- I would do like was did in the movie, 'Weekend at Bernie's.' I'd prop him up and put a pair of dark glasses on him and keep him as long as we could."

"The most devoted member of (Ayn Rand's) inner circle was Alan Greenspan, former head of the US Federal Reserve. Among the essays he wrote for Rand were those published in a book he co-edited with her called Capitalism: The Unknown Ideal. Here, starkly explained, you'll find the philosophy he brought into government. There is no need for the regulation of business—even builders or Big Pharma—he argued, as 'the "greed" of the businessman or, more appropriately, his profit-seeking … is the unexcelled protector of the consumer.' As for bankers, their need to win the trust of their clients guarantees that they will act with honour and integrity. Unregulated capitalism, he maintains, is a 'superlatively moral system.'"

"I sometimes say that Alan Greenspan overdosed on Ayn Rand when he was young. He thought that if an axe murder happened in a free market it was probably all for the best."

"[He is] one of the biggest political hacks we have in Washington."

"Greenspan's reaction with regard to the stock-market bubble has caused two more bubbles to grow: a real-estate bubble and a consumer-debt bubble... History will judge him one of the worst Central Bankers ever."

"In my view, Alan Greenspan will go down in history as one of the worst chairmen of the Federal Reserve. Future textbooks will refer to Greenspan as an example of how not to run a central bank. In order to underline the bipartisan support that Wall Street has in Congress, during his time of leadership at the Fed he was hailed not only by Republicans but also by most Democrats as "the Maestro." This, despite his extremely conservative views, which called for, among other reactionary policies, the elimination of the minimum wage. In 2000, at a House Financial Services Committee hearing on bank mergers, I asked Greenspan, "Aren't you concerned that with such a growing concentration of wealth, if one of these huge institutions fails it will have a horrendous impact on the national and global economy?" Greenspan replied, "No, I'm not. I believe that the general growth in large institutions has occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically-I should say, fully-hedged." Greenspan could not have been more wrong. Yet after leaving the Fed, he was hired to advise some of the biggest banks and wealthiest hedge fund managers in the world."

"Greenspan kept an eye on such fluctuations as the sale of vacuum cleaners in Cleveland to, as they say, " get a precise idea about where the economy is going," and of course he micromanaged us into chaos."