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The Conspiracy Letters
Join the fray! Email us at letters@poorandstupid.com. We reserve the right to publish all letters with authors' names, unless specified as not for publication or for publication anonymously. Letters may be edited for clarity and brevity.
Tuesday, February 18, 2003
ECONOMICS OF MASS DESTRUCTION: THE HISTORY Your piece on the Greenspan/Krugman convergence ("Krugman, Greenspan and Ayn Rand" 1/17/2003) was brilliant!You should do a full treatise on Rubinomics/deficit harping -- and when does the call for Greenspan's resignation reach critical mass? It's not that I believe in the word "stimulus" at all, but we need get way beyond the ring-kissing Greenspan fiscal policy approval process. He has been behind the curve for years.
And ask yourself this...If you were making a serious capital investment decision would you ever trust this guy again? Since you have know idea why rates were raised and liquidity was cut off at the knees last time why would you think it couldn't happen again. Has he ever admitted error through the whole process of boom or bust making? how me a quote. Greenspan-and-Rubinomics means no capital spending confidence unless they surrender fiscal policy to the Fed.
With at least 50% (80% is more accurate) of the economic community dead from the neck up mumbling about "deficits" and "lack of demand," the potential of being caught in this vortex of policy apathy is massive. The history of deficit-phobia is horrible:
- 1987: Mindless rate increases on light inflation, stock market crash.
- 1990: Tax increase, recession gets worse.
- 1992: Economy in recovery, but weak on the items that people vote on. Perotism (another vile strain of Rubinomics/Greenspanism) destroys Bush I.
- 1993: Tax increase, economy gets worse, and for this and many other sins the House finally changes hands after 40 years in 1994.
- 1995-2000: Tax cuts help stimulate growth, demand and raise investments and the economy. Clinton weakened, builds investment confidence. Dollars remain tight, dollar rises (endless Rubin grandstanding of "dollar policy," pure tripe and triangulation of event) and helps massive global deflation and funds the domestic "boom." Greenspan targets stocks instead of deflation. All politicians compete for credit for the "surplus" and the policies that converged (including Contract with America Republicans) to create them, private savings rate negative in 2000. Tax cuts vetoed three years into 2001, economy turns south with market bust. Government goes soft on tax reduction and spending in later 1990s. Most of this is deflationary as well. A big private debt expansion leads to a boom and then a bust follows; stock lose more the 50%.
- 2001: A watered-down tax-cut is passed with plenty of Greenspan pandering included. It promptly becomes the scapegoat for the "deficit" and "investment decline" under the insane Rubinomics equation: "Lower taxes mean less investment". You can't make this stuff up.
Anonymous
Posted by Donald L. Luskin at 6:05 PM | link
Sunday, February 16, 2003
THE SOUND OF TWO HANDS PREDICTING THE ECONOMY Re: your comment that Alan Greenspan is a "two-handed economist" -- on the one hand... on the other hand... ("Why It Will Work" SmartMoney.com, 2/14/2003). He comes by the "two handed" position honestly.There is an old tale about the judge who was holding court for his community. The plaintiff made his case and the judge said, "You know, that makes a lot of good sense. You're right." The defendant says "Judge, you haven't heard my defense." Then the defendant proceeded to make a fine defense. The judge says, "You know, you make a good case, too. You're right, too" The bailiff taps the judge on his shoulder from behind and whispers, "Judge, how can they both be right?" The judge responds, "You're right, too."
I suspect that there so many causative factors at work in this market, that everybody is right. There are no prophets now.
Anonymous
Posted by Donald L. Luskin at 5:07 PM | link
TRUTH, JUSTICE AND CAPITALISM I just wanted to write to commend you on your very insightful update today ("Krugman, Greenspan and Ayn Rand" 1/17/2003) in which you analogize Krugman and Greenspan to characters from Ayn Rand's books. Quality, quality writing. I have been a great fan of your sites ever since coming across one of your first deflation articles two or so years ago on SmartMoney.com, and I have greatly enjoyed seeing your influence increase to the point where you have been featured on National Review Online.
I do have one challenge for you though... instead of just protesting Greenspan's mismanagement of the value of the dollar, why not profit from it as well (like a good capitalist!)? After all, if the assertion that the Fed monetary machinations are the primary source of the dollar's fluctuation against gold is correct, does it not follow that the gold price should be at least somewhat predictable? And since this point of view is not widespread, it's information not shared by the broader market, correct?
Keep up the fight for truth and justice.
Ian Erickson
Posted by Donald L. Luskin at 2:14 PM | link
CRANK OR PROPHET? I couldn’t decide before if you were a crank or a prophet. Your words make sense but there is an angry tinge to them sometimes which makes me wonder.
With this recent column ("Krugman, Greenspan and Ayn Rand" 1/17/2003), I think I’ve decided. I am extremely impressed. I have read The Fountainhead, and I read newspapers widely, and I rarely, if ever, see someone think like this. So keep it up -- I’ve been enjoying the work, and this column was particularly illuminating. Awesome.
Anonymous
Posted by Donald L. Luskin at 1:19 PM | link