GREENSPAN TO THE AMERICAN PEOPLE:
"TRUST ME"

By: Jim Moore

Since none of the economists can agree on whether the U.S. economy is going like a locomotive or barely hanging on like a caboose, how can anyone expect the average F-in-economics citizen to possibly fathom our complex fiscal policy?

I know I can't. So I read columns and articles by smart ducks who, because of their relative positions, give us cogent, but opposing views of the economy. That way I can masticate some of the rhetoric.

The problem is, not so much that they disagree on what makes the economy work, but that one has a preacher-honest assessment of it and "tells it like it is," and the other explains it in terms that makes me wonder if his solutions, will in time, sink our ship of state.

For example, Ron Paul, Republican congressman from Texas, recently had an opportunity to question Federal Reserve Chairman Alan Greenspan about the tumbling value of the dollar. Greenie declined to answer Paul, citing a "gentleman's agreement" between him and the Treasury Department not to discuss dollar policy.

This naturally frosted the Congressman who opined that, if a member of Congress can't ask the one man on earth most responsible for our money policy a straightforward question, and get some kind of a satisfactory answer, how can the American public ever have the faintest idea what the Fed is doing, much less how it is literally demolishing the value of the dollar?

Greenspan's two sins, as Paul sees them, are: (1) Wildly inflating the money supply, thus creating more than $5 trillion in backed-by-nothing dollars since he became the Fed chairman, (2) relentlessly cutting interest rates below market level. Both these actions, contends Paul, make dollars too abundant and too cheap, which automatically reduces their buying power.

This kind of money manipulation erodes the value of the dollar, which makes America poorer and poorer. And if anyone is fighting to keep America strong, economically and otherwise, it is Ron Paul.

And then, there is Federal Reserve Chairman Alan Greenspan's side of this troublesome equation. The Fed just cut the key interest rate to the lowest it's been since Eisenhower was president. Greenspan's rationale is that lower interest rates will spur the economy. Never mind that because money has lost value, your dollar will buy less at any store you spend it.

Furthermore, if the rebound in the economy fails to materialize, many analysts say that the Fed will cut rates again by at least another quarter point. Which will tend to de-value the dollar even more.

Greenspan's dexterity at manipulating the money machine, pitted against a kindergarten public when it comes to economics---but nevertheless eager to let the good times roll---have prompted both the financial press and the general public to call the Fed chairman a genius.

Maybe he is. After all, President Bush plans to offer him another term as Fed chief. So if he's not a money genius, then he surely is a gifted child in the school of chutzpah.

Either way, Chairman Greenspan who professes to be a supporter of the gold standard, and an advocate of capitalism, appears to have become neither. Rather, he has given up on the "capitalist" idea of a free market for money and interest rates, and morphed into a devotee of fiat currency and centralized economic planning.

With a declining dollar, declining fortunes, and a dangerously declining America, I'd keep a hand on my wallet, and an eye on this guy.

"Published originally at EtherZone.com : republication allowed with this notice and hyperlink intact."
Jim Moore is a free-lance political writer and is a regular columnist for Ether Zone. Jim Moore can be reached at Jmoore1819@aol.com

Published in the June 27, 2003 issue of Ether Zone. Copyright © 1997 - 2003 Ether Zone.