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GREENSPAN SAYS HE KNEW ABOUT ABUSES IN SUBPRIME LENDING BUT FAILED TO FORSEE THEIR PARALYZING MARKET EFFECTS UNTIL LATE 2005
Thu Sept 13 2007 12:30:11 ET

Was Greenspan really as clueless as he claims he was? Let’s look at some recent history to find out…

The clues lie in an article written by a young Greenspan in 1966 for the Ayn Rand journal “The Objectivist”. ‘Gold and Economic Freedom’ gives a simple synopsis of banking practices and the need for a Gold standard. These days precious metal standards to limit lending/inflation of currencies are generally considered an antiquated concept, but back in 1966 the U.S. was still on a pseudo-Gold standard. The objectivist/libertarian nature of Greenspan’s article may raise some hackles, but, please just focus on the overall economic implications of what he says. Keep in mind that Greenspan continues to be a follower of Rand and has never repudiated his previous assertions. So here are some of the things Greenspan has to say about credit practices and interest rates…

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