Panderer to Power: The Untold Story of
How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession has been
translated into Chinese. Mr. Fan Zhiqiang, the Assistant Researcher and Program Official of Fudan
University, and the Professional Translator and
Interpreter at Fudan University in
China translated Panderer. He asked me to write an article about
Greenspan, which is below.
I wrote an introduction to the Chinese translation that can be read
here.
Mr. Fan
Zhiqiang wrote to me in May 2014:
"I am happy to
tell you that, on the website of Fudan University Press,a comprehensive
academic publishing house of key importance in China and in the World, you can
find the announcement and linkage of the Chinese version of your wonderful book
Panderer to Power through http://www.fudanpress.com/root/showdetail.asp?bookid=9349.
"On May 12, I sent two of my translation books with my
signatures to your home. You may receive them within a few weeks. Both books
are published by Fudan University Press. One book is my translation of Mark
Twain's short stories. It is jointly recommended by Mr. Mo Yan, the Winner
of 2012 Nobel Prize in Literature, and other literature figures. [Received.
- editor]
"Prof. BA
Shusong, the Chief Economist of China Banking Association, is very famous
in the financial and economics circle and the world at large. His Sina Weibo
(microblog) http://blog.sina.com.cn/s/blog_12b97ea6a0101ffqj.html#bsh-24-407900519)
has more than 7 million fans. [Exceeds the number of AuContrarian fans
by over 6.9 million. - editor] Fortunately, Prof. BA Shusong has kindly
recommended my translation of Panderer to Power on his Sina Weibo. [This
exceeds the number of professors in the United States who wrote about Panderer
to Power on their websites, or anywhere else, by exactly - one. FJS]
"Some Chinese
websites are also publishing the book reviews of my Chinese version of your Panderer
to Power. For example, the website of the famous Phoenix TV, a
subsidiary of US News Corporation, published some comments on this book on
May 11, 2014. (Please log onto http://news.ifeng.com/a/20140511/40244287_0.shtml)
"Currently, it
is selling well on Amazon China. It was ranked No. 18 in the economics
section last week [Two weeks ago now. - FJS] according to the website http://www.amazon.cn.
Interested readers can buy this book through the following linkage: http://www.amazon.cn/权力掮客玩转华盛顿和华尔街的格林斯潘弗雷德里克·希恩/dp/B00KCENMUO/ref=sr_1_1?ie=UTF8&qid=1401109079&sr=8-1&keywords=权力掮客"
That's the end the
good news. I will send a separate "Amazon page" that links to Amazon
China. Whether or not you plan to buy a Chinese edition of Panderer, it's
interesting to see. At least, to me.
Now to You-Know-Who:
Greenspan in China
This book is about
the influence of Alan Greenspan. Specifically, Panderer to Power: The Untold
Story of How Alan Greenspan Enriched Wall Street and Left a Legacy of Recession
explains how Alan Greenspan was able, when he was chairman of the Federal
Reserve Board, to twist finance and the minds of the average American.
I am not writing here
about the life of Alan Greenspan. For this article, I discuss the great
influence Alan Greenspan - through the central bank - had over Americans.
Secondarily, this is the story of how concentrated power in a few men's hands
helped only a few people. Alan Greenspan's decisions made the average person
poorer.
A question the reader
may ask, upon reading this article, is why I have not written about the time after
Alan Greenspan left the Federal Reserve in January 2006. There is not room to
discuss Federal Reserve Chairmen Ben Bernanke and Janet Yellen, here. But, all
that they have done - to the United States and the rest of the world - was set
in motion by Alan Greenspan. Financial, economic, and social turmoil that has
gotten worse during the Bernanke and Yellen chairmanships finds its source in
the actions and words of Alan Greenspan
The Federal Reserve is the central bank in the United States. It sets the monetary
policy of the U.S. Since the U.S. dollar is still the currency in which most of
world trade is conducted, every other central bank in the world is restricted
in its ability to conduct a national monetary policy, when the Federal
Reserve is run by a reckless chairman. Under Alan Greenspan, who was Federal
Reserve chairman from 1987 to 2006, the Federal Reserve consistently held
interest rates too low by pumping more dollars into the economy than were
needed to conduct business. Some of the "extra" dollars flowed
overseas, which is how Alan Greenspan restricted the ability of central banks,
including China's, to do what it thought was the best policy for the country.
Until 1971, central
banks could not decide, by themselves or among themselves, what the world's
interest rates would be. The gold standard prohibited a handful of men (they
were all men at the time) from sitting around a conference table with such
power over the average person's life. On August 15, 1971, President Richard
Nixon announced the United States would no longer redeem currencies presented
to the United States Treasury in return for a specific amount of gold. The
result of August 15, 1971- both in the United States and abroad - was to create
tremendous distortions. (This is a necessary simplification of both the
"gold standard" and of "August 15, 1971," given the length
of this article.)
The 1970s was a
decade of high inflation. Once President Nixon had freed the Federal Reserve
from the discipline of a gold standard, the Fed started "making up"
monetary policy. This caused turmoil during the 1970s. The currencies (of the
United States, the European countries, and Japan) swung violently in relation
to each other as did interest rates, unemployment, and prices.
These distortions
were reduced in the 1980s. They were not eliminated, but economists in the
United States took advantage of the average person's ignorance by saying over
and over that Paul Volcker (who was Federal Reserve Chairman from 1979 to 1987)
had "gotten rid of inflation."
The American economists
have erased William McChesney Martin from history. Martin was the Federal
Reserve chairman from 1951 to 1970. In the 1950s, he faced increasing pressures
from university economists (mostly at Harvard) who said "the United States
economy needs to have inflation so that we can have full employment and we can
compete with other countries."
Martin said
"No." He fought the politicians, Senators, and Congressmen who wanted
the Federal Reserve to produce inflation. The Inflationists had decided the
U.S. economy needed prices to rise at a rate of 2% a year.
Why did they want
inflation at all? Because, in the short-term, if a central bank "prints
extra dollars," the politicians can use the inflated number of dollars to
spend money they would not otherwise have. This is known in the United States
as politicians "buying votes." That is not always what they are
doing. Politicians sometimes have a genuine interest in helping the people.
But, creating dollars from nothing only works in the short-term.
On August 13, 1957,
Chairman Martin testified before the Senate Committee on Finance. Regarding the
target of a 2% institutionalized inflation rate, Martin said: "[Two]
percent may not seem startling [but] the price level would double every 35
years and the value of the dollar would be cut in half each generation. Losses
would be inflicted on millions of people, pensioners...all who have fixed
incomes.... [T]hose who would turn out to have savings in their old age would
tend to be the slick and the clever...."
Martin told the
Senators the person most likely to be injured in the inflationary cycle was the
"'hardworking and thrifty...little man' on fixed income who could protect
neither his income nor the value of his savings."
In Panderer to
Power, my book about Alan Greenspan, I show how the slick and the clever
were able to concentrate and leverage paper assets over the next half-century.
No one did more to launch the slick-and-the-clever into isolated comfort,
secluded from the average American, than Alan Greenspan.
Back when William
McChesney Martin argued against the proposed 2% inflation target, he stated:
"There is no validity whatsoever that any inflation, once accepted, can be
confined to moderate proportions."
Martin said, at a
different hearing: "We are dealing with waste and extravagance,
incompetency and inefficiency, the only way we have in a free society is to
take losses from time to time. This is the loss economy as well as the profit
economy."
That is one of the
greatest problems today, engendered by interest rates that have been too low
since the early Greenspan Years. Incompetency and waste go on and on,
subsidized by price fixing. One form of price fixing when Alan Greenspan was
chairman was to push and hold interest rates at much too low a rate. This
allowed companies to borrow money when they should have gone out of business.
By not going out of business, they made it harder for well managed companies to
earn enough money to grow, to hire more workers, or to stay in business,
themselves.
Also, by holding
interest rates too low, people were able to borrow when they did not have the
ability to pay back the loan. Alan Greenspan coaxed millions of people who
should not have bought houses into doing so. He did this to keep the U.S.
economy operating at a faster pace than it could have without the Greenspan
Fed's manipulative policies.
The years since Alan
Greenspan started pushing interest rates too low have been very inflationary.
American economists say: "There has been no inflation." Recently,
these very well paid economists have claimed "inflation is too low."
This is not true for
two reasons. First, the prices the average person pays (for food, gas, a
doctor, a house: the things they need) have risen much faster than their wages
have risen. That is what matters.
Second, prices of
assets, including stocks, bonds, houses, and commodities have risen to a
tremendous degree since Alan Greenspan became Federal Reserve chairman. Most of
these assets are owned by a small part of the American population.
This is not only true
in the United States, of course. There are many other reasons for the
financial, economic, and social turmoil of 2014. Without understanding the
Federal Reserve's role under Alan Greenspan in "creating" false and
distorted living standards, studies about the destruction of the monetary unit
(the dollar) and of family life in America and elsewhere ignore the elephant in
the middle of the room.
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