Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, ‘Buy Gold’


Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, “Buy Gold” (ZeroHedge, Oct 29, 2014):

It appears it is time for some Hillary-Clinton-esque backtracking and Liesman-esque translation of just what the former Federal Reserve Chief really meant. As The Wall Street Journal reports, the Fed chief from 1987 to 2006 says the Fed’s bond-buying program fell short of its goals, and had a lot more to add.

Mr. Greenspan’s comments to the Council on Foreign Relations came as Fed officials were meeting in Washington, D.C., and expected to announce within hours an end to the bond purchases.

He said the bond-buying program was ultimately a mixed bag. He said that the purchases of Treasury and mortgage-backed securities did help lift asset prices and lower borrowing costs. But it didn’t do much for the real economy.

“Effective demand is dead in the water” and the effort to boost it via bond buying “has not worked,” said Mr. Greenspan. Boosting asset prices, however, has been “a terrific success.”

He observed that history shows central banks can only prick bubbles at great economic cost. “It’s only by bringing the economy down can you burst the bubble,” and that was a step he wasn’t willing to take while helming the Fed, he said.

The question of when officials should begin raising interest rates is “one of those questions I cannot answer,” Mr. Greenspan said.

He also said, “I don’t think it’s possible” for the Fed to end its easy-money policies in a trouble-free manner….

“Recent episodes in which Fed officials hinted at a shift toward higher interest rates have unleashed significant volatility in markets, so there is no reason to suspect that the actual process of boosting rates would be any different, Mr. Greenspan said.

“I think that real pressure is going to occur not by the initiation by the Federal Reserve, but by the markets themselves,” Mr. Greenspan he said.

And finally – while CNBC’s audience is told what a terrible thing gold is, “The Maestro”, having personally created the financial cataclysm the world finds itself in following a lifetime of belief in fiat, Keynesian ideology and “fixing” one bubble with an even greater and more destructive asset bubble, has suddenly had an epiphany and now has a very different message from the one he preached during his decades as the head of the Fed.

Mr. Greenspan said gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments.

What Greenspan failed to add is that it is thanks to his disastrous policies (subsequently adopted by Bernanke and Yellen) that gold is the “place to put money.”

And now, paging Scott Nations.

3 thoughts on “Alan Greenspan: QE Failed To Help The Economy, The Unwind Will Be Painful, ‘Buy Gold’”

  1. As if anyone would listen to him. He is the one who pushed ARMs, saying they would save homeowners thousands in payments because the rates were so low. Now, most fool Americans who got into the housing boom, and still have a house have had their mortgage payments triple so far this year. It is creating another round of foreclosures, every point a mortgage goes up, it raises the payment 13% a month.

    I would use Greenspan as a negative indicator…..whatever he says, do the opposite.

  2. As for the FED not raising interest rates for greedy gut bankers, that is typical. But, they cannot do a thing about rising mortgage rates which have tripled this year. Interest rates for consumers have gone through the roof.

  3. The trouble is Marilyn, he was put on a pedestal created by the jew owned MSM, compliant Democratic Government and jew owned Federal Reserve and thus, with his patronising approach and resultant ability to use the bullshit of all economists and banksters, poor old Joe Public had no option other than to compliantly accept his word.
    Unfortunately 20 years on, the King did indeed have no clothes, but anyone even questioning him, Bernanke or Yelland, or indeed Carnie or his fellow Bank of England Governor Zionist jew Mervyn King, are trashed of demeaned as conspiracy theorists.

    Our irrelevance is reaching new levels.


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