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.