Oh, shut up!

Alan Greenspan, the former Fed Chairman and discredited "Maestro", deserves more of the blame than any other person for the financial crisis of 2008.  Irresponsible monetary policy, based on a hubristic and  erroneous understanding of the causes of low inflation, created the conditions for the financial market excesses that the world is still struggling to cope with today.

If you or I had been the architects of a comparable disaster, we'd probably hide as far out of sight as we could possibly manage.  Greenspan's not like us, though.  He's still prepared to retail his discredited opinions to anyone who turns up with a chequebook. 

Hence his latest outpouring to Bloomberg News    Greenspan thinks that a small increase in taxes can be tolerated as long as it allows the US government to cut social spending.  And he goes on to say:  

“Even if we have to pay the cost of a significant rise in taxes to get a significant slowing, and then decline, in social benefits that is a very cheap price,” Greenspan said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “A large increase in taxes required to fund what is currently in the books is going to cause a recession,” he said. “If we can get away with that as the only cost to this whole problem, I think that’s a pretty good deal.”

I didn't see the interview when it was broadcast, so I can't tell you whether Betty Liu was able to keep a straight face when Greenspan said this.  Betty is surely aware, as is just about every other sentient being on the planet apart from the Maestro himself, of just how the financial crisis became so severe.  The Greenspan Fed was never willing to tolerate any meaningful downturn in financial markets, constantly easing conditions every time the markets so much as stuttered.  As a result, excesses that would have been easily dealt with through a minor correction were allowed to build up, until the whole edifice came crashing down uncontrollably in 2008.  

And now the guy who allowed all of this to happen has the chutzpah to suggest that a recession would be a small price to pay for cleaning up the mess!  Unbelievable.  And anyway, what economic theory is Greenspan now relying on to tell him that  recession will help to cure the US's fiscal problems?  A quick look at what's happening in Europe or Japan would suggest that what the US needs if it's to start curbing its deficit is continued growth, not some exercise in Republican fiscal machismo.