> From: [EMAIL PROTECTED] (Tom Walker) > Subject: [PEN-L:12055] Re: Greenspan on Govt. Intervention in Markets > Greenspan on Role of Governments in Markets: > > > ``Central banks are led to provide what essentially amounts to catastrophic > >financial insurance > > coverage,'' he said, adding, however, that ``such a public subsidy should > >be reserved for only the > > rarest of disasters.'' > > By my accounting, the "rareness" of such intervention works out recently to > be about once every two or three years. Then there is the phenomena of > creeping monetary looseness in order to avoid a situation in which > catastrophic intervention becomes necessary. Kind of like the alcoholic who > needs just a *small* drink to steady the nerves. Funny I didn't take you for a gold standard kind of guy. > The truth that Greenspan acknowledges is that central bank intervention to > "calm" markets is a public subsidy. To be more precise, it is a massive > welfare program for the rich. To call it "insurance" is a bit odd -- the > insured don't pay a premium for the coverage and the extent of their > protection is limited only by the vastness of their holdings. A chain-reaction of bankruptcies might conceivably be of some harm to the working class, notwithstanding the pleasure of watching many of the rich cease to be so. I have some dim recollection of problems of this nature in the past. By my reckoning this puts you roughly to the right of Milton Friedman, but everybody has a bad day now and then. I'm sure you'll rebound, or maybe the right word is reflate. Cheers, "Greenback Max" ================================================== Max B. Sawicky Economic Policy Institute [EMAIL PROTECTED] Suite 1200 202-775-8810 (voice) 1660 L Street, NW 202-775-0819 (fax) Washington, DC 20036 Opinions here do not necessarily represent the views of anyone associated with the Economic Policy Institute. ===================================================
