Skip to content

Alan's Finance Blog

Financial news, reports, and articles

Menu
  • About
  • Link Exchange
  • Mailing List
  • Privacy Policy
Menu

Greenspan Misapplied Free Market Theory

Posted on October 27, 2009

(My Comments on “Frontline; The Warning”)

Silver Stock Report

by Jason Hommel, October 23rd, 2009

Thanks to my wife, God bless her, I watched “Frontline: The Warning” night before last.  It aired on Oct 20th, 2009.  You can view it online, here:

http://www.pbs.org/wgbh/pages/frontline/warning/view/

There are 679 comments on it already.

The show is about “the warning” given by Brooksley Born, who, while acting as Chair for the CFTC (the commodities Futures Trading Commission), warned of the dangers of “black box,” “over the counter” derivatives.  After she was shut up by Congress and Alan Greenspan, 6 weeks later, LTCM (Long Term Capital Management) blew up in early 2000.  http://en.wikipedia.org/wiki/Long-Term_Capital_Management

Frontline shows that Greenspan was one of Ayn Rand’s top students, who believed in a philosophy that government is the problem, and that markets are the solution, and thus, self-regulating.

Frontline shows the absurd conclusion of Greenspan’s philosophy when it showed that Greenspan invited Born to a meeting, where Greenspan said something like, “I suppose you think fraud should be regulated.  I don’t.”  He thought the market would figure it out.

Shockingly, the film shows Greenspan painfully admitting that his philosophical views that he held for 40 years were wrong.  He does not elaborate.  Perhaps he’s still not exactly sure where he went wrong.

Perhaps I can help.

Being familiar with Ayn Rand’s free market views, here’s where I believe Greenspan went wrong.

Greenspan tried to apply the views of an atheist, Ayn Rand.

IN MY OPINION, Greenspan tried to let markets be free, but Greenspan did not understand the basic definition of markets, or freedom.

In my opinion, markets are where things are traded, not where people are traded by entering into contracts.

Markets are where multiple sellers compete with multiple buyers, in the open, and trade, and walk away, free to choose another trading firm tomorrow.

Black box, over the counter, derivatives, are not markets, even if they ever do trade in the open.

The spot market is like freedom.  Futures contracts, and OTC derivatives, are like slavery.

In my opinion, futures contracts, like debt contracts, lead to compulsory performance, and thus slavery.  And slavery is the exact opposite of freedom!  That’s Greenspan’s big error, the failure to see that slavery is the opposite of freedom!

Again, as an example, allowing people the freedom to trade slaves does not promote freedom, it promotes slavery!

Allowing banks to enslave people with too much unpayable home loan debt is a fruit of that error.
Allowing banks to enslave one another so that if one topples, they all topple, is another fruit of that error.
Allowing people to enslave banks to perform what they cannot, so that they “need” bailouts, is another fruit of that error.


Spread the love

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Categories

Recent Posts

  • Gold and Inflation: Here’s a Market Myth
  • Here’s a Strong Indication That the Bear Market Has Legs
  • Why the Threat of Deflation is Real
  • U.S. Dollar: Has the Mainstream Been Way Too Confident?
  • Summer of Love for Gold Bulls: How “Quandary” Became Clarity
  • Save Fintech? Ban Short Selling – It’s Not That Simple

Archives

Blogroll

  • Alan's Forex Blog – Forex News, Reviews, and Articles
  • Alan's Money Blog – Learn to Make Money Online!

©2025 Alan's Finance Blog | Design: Newspaperly WordPress Theme