Greenspan Admits His “Free Market Ideology” Flawed

[coolgeee]

Former Federal Reserve Chairman Alan Greenspan said a “once-in-a-century credit tsunami” has engulfed financial markets and conceded that his free-market ideology shunning regulation was flawed.

“Yes, I found a flaw,” Greenspan said in response to a grilling from the House Committee on Oversight and Government Reform. “That is precisely the reason I was shocked because I’d been going for 40 years or more with very considerable evidence that it was working exceptionally well.”

Greenspan said he was “partially” wrong in opposing regulation of derivatives and acknowledged that financial institutions didn’t protect shareholders and investments as well as he expected. Forecasting is an inexact science, he said.

“If we are right 60 percent of the time in forecasting, we are doing exceptionally well; that means we are wrong 40 percent of the time,” Greenspan said. “Forecasting never gets to the point where it is 100 percent accurate.”

In May 2005 speech, Greenspan said that “private regulation generally has proved far better at constraining excessive risk-taking than has government regulation.”

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Greenspan Admits His ?Free Market Ideology? Flawed

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[Truthmatters]

The head of the SEC Cox and ex secratary of the treasury Snow also testified and said that this was creaded by deregulation.

Hopefully this little fanatsy of an unfettered market being magically delicious to consumers will finnaly die.

 

[ronpaul2008]

Here's a bit of background. Greenspan was once a free market advocate. Then he sold his soul and became chairman of the Federal Reserve. By joining the Fed he abandoned his free market principles, and joined a corporation that has been given a monopoly over the money supply by the government and the right to manipulate the economy. This is not a free market. It is a controlled system. There is no one more powerful then Bernake and Paulson right now. There is nothing these guys can't do.

In a free market system interest rates would be set by what private parties are willing to lend for. However under this non free market system the Federal Reserve sets the interest rates. When the Fed lowers rates it makes money cheaper ie inflating the money supply, if it raises rates it makes money more expensive and deflates the money supply. The Fed was sold to the American people with this intention. That the Fed could control the inflation and deflation and prevent the booms and bust cycles. However the Fed promptly inflated the money in the roaring 20's and created the great depression. By the end of WWII we had most the worlds gold in our possession so recovered on a strong dollar that was 'good as gold'. Now the Fed has done it again with two bubbles in a row. All fiat currencies get inflated. All governments get cocky and think they can get away with it forever. What Greenspan is saying here is that theres a flaw but its not in the federal reserve system of controlling the money supply and the economy, its in the government end of things on the regulation side. He is saying to the politicians, 'we bankers can get away with it, we can keep the party going'. Our monetary system is whats flawed. Under a traditional gold backed system it would not need to be regulated.