Alan Greenspan has sometimes been accused of being intentionally inscrutable. While it may have once been a fair charge, a very different Greenspan was on display last night when he appeared on the Daily Show with Jon Stewart.
Some of his explanations were startlingly frank, expansive and plain-spoken. For instance, when he explained what it is the Federal Reserve does he uttered exactly the sort of thing that the tinfoil hat Fed conspiracy theorists think that an establishment type would never say. And when Jon Stewart tried his own version of Fed conspiracy talk, he got bitch slapped.
“It seems to me that we favor investment, but we don’t favor work,” Stewart said. “The vast majority of people work — they pay payroll taxes, and they use banks. And then there’s this whole other world, of hedge funds and short-betting and — it seems like craps. And they keep saying, no no, no, don’t worry about it, it’s free market. That’s why we live in much bigger houses. But it really isn’t. It’s the Fed, or some other thing, no?”
“I think you better re-read my book,” Greenspan said. “What a sound money system does is to stabilize all the elements in it, and reduces the uncertainty that people confront. And the one thing all human beings do when they are confronted with uncertainty is pull back, withdraw, disengage, and that means economic activity, which is really dealing with people, just goes straight down.”
There’s more on the exchange at the Wall Street Journal’s Real Time Economics blog. Or you can just watch the video above. It’s “Safe For Work”…to the extent that watching fake news programs can be considered “Safe for Work” at all.
Posted by Give-up Agreement , Sep 19, 2007 10:41AM
John Stewart can be very funny, but when it comes to his views on politics and economics he's an ignorant pinko. If you stripped away the humor you probably couldn’t tell him apart from Dennis Kucinich, Susan Sarandon, Bill Maher, etc.
Posted by , Sep 19, 2007 10:42AM
john stewart is a yutz. and as the host of a fake comedy news program he should know that he preys on the "vast majority of people [who] work" much more than your average hedge fund manager that at least adds economic value
what exactly does the daily show add? aside from biased "reporting" and funny jokes? (in all fairness though, the run of the mill working, tax paying, bank depositing sucker probably prefers a funny joke to economic value)
Posted by , Sep 19, 2007 10:56AM
what I learned from this video is that jon stewart knows nothing about economics.
Posted by , Sep 19, 2007 10:57AM
"what exactly does the daily show add? aside from biased "reporting" and funny jokes?"
Ummm. You do realize that television is a for-profit business, right?
Posted by Random Banker , Sep 19, 2007 10:59AM
The best part of the whole thing is Greenspan admitting his models are pretty much useless.
There's nothing wrong with Stewart's line of thinking. He simply has no fucking idea what he's taking about. He doesn't claim to, he's just asking questions. He doesn't understand that the average person has a pension or a 401 that is invested in the market even if they don't know it. He doesn't get that Viacom is able to make nifty shows like his because they raise capital in the public markets...ect. I'd argue Stewart's America the Book is far more insightful into politics that Greenspan's book is actually insightful into the markets.
Also, Greenspan does a pretty poor job of justifying his existence. "You didn't need central bank when were on the Gold Standard" Uh... we had major depressions and panics every 7 years when there was no Gold Standard. JP Morgan had to step in himself and act as the central in 1907. I'll chalk this up to him not going into all of this because it would have gone way over John Stewart's head.
I really would vote for Ron Paul if didn't completely misunderstand this fact.
Namaste.
Posted by Random Banker , Sep 19, 2007 11:02AM
Errr.... panics every 7 years when there was no central bank, not no gold standard.
Posted by , Sep 19, 2007 11:04AM
This is a good example of why Hollywood is mostly Democrats. They don't know crap about economics but make plenty of dough which leaves them with the "luxury" of ignorance.
"How dare those greedy Wall Street types make lots of money, they don't contribute any 'artistic' value. We need to defend the little guy so he can still afford to go to overpriced movies."
Posted by , Sep 19, 2007 11:06AM
He was close to making a good point about the disparity between the capital gains tax and income tax but couldn't get his head around. Too bad. That's a fair question for the Greenspan. One that he evaded anyways.
Posted by Wheel Watcher , Sep 19, 2007 11:28AM
Anon 10:57 Are you suggesting that the ability of television to put jokes in your living room is even remotely important to the macro economy as Wall Street's ability to allocate capital?
Posted by Nicholas Mycroft , Sep 19, 2007 11:32AM
This is a good example of why the finance industry is mostly Republicans. They don't know crap about anything but economics but make plenty of dough which leaves them with the "luxury" of ignorance.
N.B. the above does not apply to anyone in the industry who refrained from voting for W in '04.
Posted by , Sep 19, 2007 11:39AM
Nicholas *most* people only do real work because they don't have the brains/talent/knowledge/drive (pick one) to make big money.
You really think the lady who empties your recycle bins in the office does it because she thinks it makes her a better person?
You are clearly some sort of communist if you believe what you just said. Don't you know that capitalism rewards the capitalist?
Posted by , Sep 19, 2007 11:47AM
Could someone please explain to me why Democrats insist that the captial gains rate should be on par with the income tax rate? There are millions of investors out there who aren't in the top tax tier. The money they have invested in the markets has already been taxed once when they earned it as income. What is fair about the government then being able to take their rip again on money that grows as investments?
Posted by BR , Sep 19, 2007 11:48AM
Tin-Foil Hats ..... did someone mention Barry Ritholtz ????
Posted by BR , Sep 19, 2007 11:51AM
Nicholas Mycroft ..... so what's the problem with that ??? DOPE
Posted by , Sep 19, 2007 12:24PM
11:47. They're not taxing the same money again. They're taxing the income on that money. It's not fair to favor that kind of income over the other kinds. Income is income. What part of that is unclear to you?
Posted by , Sep 19, 2007 12:33PM
11:47 - And capital gains only apply if you hold for the long term - holdings under a year are taxed at the normal rate, like income.
Posted by , Sep 19, 2007 12:34PM
Nicholas,
As a Democrat (obviously), were you offended by being compared to Hollywood people or not understanding economics. Granted both could considered quite bad.
Just curious.
(I never fail to get someone's goat on this site. Entertaining.)
Posted by , Sep 19, 2007 12:38PM
The USD is the worst holder of value. I disagree with Paul on returning to the old gold standard, but I do agree that our currency should be backed with something like a basket of PMs. I'm not sure if forex guys only priced in for a 25bp bump by the fed yesterday, but an intraday of when the Fed announced and forex rate reaction is telling about how the dollar is doing.
Random Banker, are there any empirical data out there that demonstrate the lack of a Central Bank was the causation of the 7-year boom/bust cycles to which you refer?
Posted by Nicholas Mycroft , Sep 19, 2007 12:39PM
11:39. Can you read?
BR. given a halfway-decent social safety net and a progressive tax code, no problem whatsoever. go nuts.
Posted by Nicholas Mycroft , Sep 19, 2007 12:53PM
12:34. I don't like "ad populum" mudslinging and for no good reason I did some of my own. I may be snippy because I'm irked by the Fed.
Posted by Crankster , Sep 19, 2007 1:03PM
Jesus, Nicholas, don't give a thoughtful, reasoned, egalitarian response! You might just make 11:39 look beyond his prejudices, undermining his entire worldview. Are you trying to provoke an existential crisis?!?
Give Up Agreement and 10:56--I know that this might be a stretch, but maybe, just maybe, Stewart was feigning ignorance in order to get Greenspan to explain economic to his audience.
Posted by , Sep 19, 2007 1:06PM
Irked by the Fed we can agree on. Closet Libertarian myself. Think the blatant media/market manipulation by both parties is out of control.
Posted by Random Banker , Sep 19, 2007 1:14PM
I saw Death to Smoochie. If Stewart could "feign" that well he'd get more movie roles.
Posted by , Sep 19, 2007 1:16PM
Stewart is cagey but I think he knows that would be pointless - although he has certainly expressed in the past he feels like it's cheating that his audience will applaud anything said that is even modestly left of center, even the great JS must certainly realize the futility of hoping they will learn somethng as complex as a basic economic theory.
Sadly, most of my friends still get the majority of their current events from the Daily Show.
Posted by , Sep 19, 2007 1:20PM
The finance industry is not mostly republican, and FAR from mostly conservative. In fact it probably leans the other way. People are constantly shocked that I am pro-life.
Then again maybe its only at Goldman. But here among my coworkers I'm pretty sure the majority of the department wrote in for Hilary in 2004.
Posted by , Sep 19, 2007 1:28PM
I'm pretty sure Blankfein and Mack wrote checks to Hillary amongst many other notables.
Seems like the finance industry is writing very few checks to the Republican candidates, probably because they're all exactly the same, and not going to get elected in 2008. The Nevada Oddsmakers groups who haven't been wrong in 30 years on political contests say that no Republican candidate can beat Hillary in 2008.
Well, none of them --- except Ron Paul, according to the Oddsmakers.
Posted by , Sep 19, 2007 1:30PM
@1.28,
(i.e. Ron Paul)
we wish! ........seriously?
Posted by Jesus , Sep 19, 2007 1:32PM
Pro life? That is fucked up. What're you equities in Dallas or what? Riddle me this?
I've always wanted to ask a real live conservative this? Do republican initially undermine the education system in hope that religious nut cases are more easily cultivated if kept ignorant? Or is it just sheer coincidence of dual incompetence? I've always long held that Republican intentionally try to keep as much of the population stupid as possible.
Posted by JT , Sep 19, 2007 1:35PM
I'm pretty sure anyone with half a brain (give or take) on Wall Street is at least closet-libertarian. Its the only real view that even borders on rational arguments and facts supporting its ideas, as opposed to the blatent poppycock BS being slung by both the left and right.
Posted by , Sep 19, 2007 1:42PM
JT, smart people don't support or oppose policies on the basis of faith in some political philosophy (e.g. libertarianism). Smart people support or oppose policies solely on the basis of pecuniary self-interest.
Posted by Judas , Sep 19, 2007 2:06PM
No Jesus, that's just Democrats making more Democrats. Personally, I'm pro-death - especially for addled superstars of any stripe tired of sticking around on this big blue marble. Why limit yourself to killing only the unborn when we can clean out the gutters of so many unwilling yet registered voters? Along with the fed bailout - can only imagine the squealing of "Moral Hazard" from you people. JT - you rock.
Posted by JT , Sep 19, 2007 2:55PM
spanks. It is no wonder Friedman, etc are/we libertarians. Its pretty much a 'duh' sort of decision once one finally removes one's head from one's ass.
Personal responsibility, accountability for one's actions, the opportunity to do whatever the f&ck one wants to one's body on one's own property, economic reality, acceptance of basic human nature, etc, etc...These are some pretty simple ideas that for a variety of reasons (upon which their very existence is hinged), neither blue nor red seem to comprehend.
Posted by Jesus , Sep 19, 2007 2:58PM
aw come on now. do we really think the people of Connecticut are dumber than the people of Alabama?
Posted by , Sep 19, 2007 3:38PM
debatable
Posted by , Sep 19, 2007 3:50PM
Paul has a 1k/plate fundraiser on the 13th somewhere in Manhattan, it'll be interesting to see if anyone turns up
Posted by JT , Sep 19, 2007 5:18PM
Me want Tickets (free ones, maybe, anyone?)
Posted by , Sep 19, 2007 7:05PM
"Pinko?" Really? What year is this?
BTW -- George Bush looked into Vladimir Putin's soul and saw a great guy and a good friend... so now that the "Commies" and the president are pals, you may want to get some new ignorant rhetoric.
Posted by Libs are scum , Sep 19, 2007 7:23PM
Is there anything viler than a person who believes that killing unborn children is ok? 1:32pm, the world would be a better place without you. Please abort yourself.
Posted by J$ , Sep 19, 2007 7:35PM
Why bring Alabama into this? Bama is a good place with great college sports. I just don't like their brand of social conservative Republicanism.
I think Greenspan put it best, something like he's a Republican with a libertarian bent, which I'd consider myself. The 'Ron Paul libertarians' don't get basic facts that (i) politics is a popularity contest, and mainstream is where the votes are at; (ii) politics is about compromise.
eg. Bush may have signed farm subsidy bills, but he also cut taxes. Give and take.
Posted by , Sep 19, 2007 7:49PM
Anon @ 3:50PM ---- I definitely want tickets to this fundraiser---$1k a plate is nothing and my soul feels a little cleaner donating a pittance to the most honest politican running for President. Post more info somewhere on Dealbreaker if you learn more.
Posted by Moreno , Sep 19, 2007 8:39PM
There are some issues I don't agree with Ron Paul on like abortion. He says it should be up to the states-- but you know what -- I can avoid getting pregnant, but having the Fed move the interest rate up and down to make the rich richer is something I have no control over, so I'm going to vote for Ron Paul
Ron Paul points out that inflation helps wall street, but it robs the poor and middle class blind. That's why he wants to return us to a gold standard.
I'm working my but off to do everything I can to get this man elected.
“All that is necessary for the triumph of evil is for good men to do nothing.” Edmund Burke
For god sake people, get off your butt's and do something ronpaul meetup com
Please help.