Alan Greenspan

I guess I should warn you, if I turn out to be particularly clear, you've probably misunderstood what I've said.

I have found no greater satisfaction than achieving success through honest dealing and strict adherence to the view that, for you to gain, those you deal with should gain as well.

I do not deny that many appear to have succeeded in a material way by cutting corners and by manipulating associates, both in their professional and in their personal lives. But material success is possible in this world and far more satisfying when it comes without exploiting others.

It is decidedly not true that "nice guys finish last," as that highly original American baseball philosopher, Leo Durocher, was alleged to have said.

The Fact that our economical models at The Fed, the best in the world, have been wrong for fourteen straight quarters, does not mean they will not be right in the fifteenth quarter.

If we allow terrorism to undermine our freedom of action, we could reverse at least part of the palpable gains achieved by postwar globalization. It is incumbent upon us not to allow that to happen.

Look at it! Look at it, damn you! This is the result of your consistent, persistent, grinding, impoverishing inflation, you despicable loathsome morons!

The more flexible an economy, the greater its ability to self-correct in response to inevitable, often unanticipated, disturbances and thus to contain the size and consequences of cyclical imbalances.

Whatever you tax, you get less of.

I was a good amateur but only an average professional. I soon realized that there was a limit to how far I could rise in the music business, so I left the band and enrolled at New York University.

There are no easy choices. Easy choices are long gone.

Protectionism will do little to create jobs and if foreigners retaliate, we will surely lose jobs.

Once stock prices reach the point at which it is hard to value them by logical methodology, stocks will be bought as they were in the late 1920s not for investment but to be unloaded at a still higher price. The ensuing break could be disastrous because panic psychology cannot be summarily altered or reversed by easing money policies.

Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear.

Since becoming a central banker, I have learned to mumble with great incoherence.

Rising interest rates have been advertised for so long and in so many places that anyone who has not appropriately hedged this position by now obviously is desirous of losing money.

A decline in the national housing price level would need to be substantial to trigger a significant rise in foreclosures, because the vast majority of homeowners have built up substantial equity in their homes despite large mortgage-market financed withdrawals of home equity in recent years.

I was aware that the loosening of mortgage credit terms for subprime borrowers increased financial risk. But I believed then, as now, that the benefits of broadened home ownership are worth the risk.

I believe that the general growth in large [financial] institutions have occurred in the context of an underlying structure of markets in which many of the larger risks are dramatically—I should say, fully—hedged.

Improvements in lending practices driven by information technology have enabled lenders to reach out to households with previously unrecognized borrowing capacities.

The world of antitrust is reminiscent of Alice’s Wonderland: everything seemingly is, yet apparently isn’t, simultaneously. It is a world in which competition is lauded as the basic axiom and guiding principle, yet "too much" competition is condemned as "cutthroat." It is a world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as "enlightened" when initiated by the government. It is a world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict—after the fact.

Those of us who have looked to the self-interest of lending institutions to protect shareholder's equity—myself especially—are in a state of shocked disbelief

The need for values is inbred. Their content is not.

Modern dynamic economies do not stay still long enough to allow for an accurate reading of their underlying structures.

Of course, shedding the debt burden would be a happy development for our country, but it would nevertheless pose a big dilemma for the Fed. Our primary lever of monetary policy was buying and selling treasury securities—Uncle Sam's IOU's. But as the debt was paid down, those securities would grow scarce, leaving the Fed in need of a new set of assets to effect monetary policy.

I came to a stark realization: chronic surpluses could be almost as destabilizing as chronic deficits.

When trust is lost, a nation’s ability to transact business is palpably undermined.

In general, corruption tends to exist whenever governments have favors to extend, or something to sell.

An area in which more rather than less government involvement is needed, in my judgment, is the rooting out of fraud. It is the bane of any market system.

The probability of ten consecutive heads is 0.1 percent; thus, when you have millions of coin tossers, or investors, in the end there will be thousands of very successful practitioners of coin tossing, or stock picking.

The question is not all that difficult once you recognize that there is far greater momentum in the budget deficit and in spending than in the official figures. Once you have spent $1.2 trillion it's very hard to say no to a constituency group that wants $4 billion.

You have to ask yourself what job spending will do. It does increase GDP. Always has, always will. The question is, how long can you do it? The original theory was that you prime the pump for the private sector. There is no evidence that has happened. The housing credit, for instance, just moved housing purchases forward, it didn't expand the market. Cash for Clunkers was a very similar situation.

After stimulus, the deficit will come down. But then it will go up again, mainly due to the major long-term problem, which is Medicare spending, and we don't know what it will be. And we need to remember that if our estimations are wrong, it's far more of a problem if we've underestimated the deficit. If we've overestimated it, it's always easy to spend more.

I wouldn't favor increasing immigration solely for the purpose of propping up the housing market. But we have two immigration problems, each on one end of the income scale. The notion that immigration negatively affects living standards in the United States is wrong. Undocumented immigrants add very significantly to the American economy. And on the other end of the income distribution, the restrictive quotas do us enormous damage. We need to stay on the cutting edge. And our schools are failing. We don't always have the technical skills we need. If we don't get them from somewhere else, we'll finds ourselves falling behind others. The way to get them is to import them from abroad.

What I would've liked to see in financial reform was a diagnosis of the problem and then an effort to address it. What the data show is that we had inadequate capital for decades. The way we know that is the fact that when the crisis came upon us in 2008, we had this huge bill to taxpayers. That bill is the degree of subsidization we had for years when there was inadequate capital. Before the crisis, in the 50s and 60s and 70s, the system had 10 percent capital, which seemed reasonable. But then we learned that there were tail risks that we had never actually observed. The tail is not fat, but obese. We need a lot more capital going forward. If that had been done in the early years, the bubble would have risen and collapsed, but the losses would've been absorbed by the common shareholders of individual investment institutions.

I cannot conceive of a politically feasible solution to this problem which will overdo cutting the deficit, where overdoing means harming the economy. It might be technically possible, but it is not realistic.

Coming to the issue of taxes, this gets to the more fundamental issue of the effects of taxation and spending cuts. There are several studies out there evaluating past efforts at fiscal restraint that show the heavy weight of successful contraction has been on the spending side. There's some question of the data, in that you only have 25 observations and they're all unique and so homogenizing them is difficult, but the general conclusion is that you cannot successfully attack fiscal problems through taxes. A bit value-added tax will cure the budget deficit temporarily, but the spending forces that generated it are still in play. But if you cut spending, it's a different base. And there are unquestionable studies showing that higher the level of taxation in the system, the less viable and innovative is the economy.

Back in 1982, when we had our Social Security commission, we decided Medicare was too difficult to handle, and we had 25 years to deal with it. Now it's 25 years later and nothing has been done.

The true measure of a career is to be able to be content, even proud, that you succeeded through your own endeavors without leaving a trail of casualties in your wake.

The guiding purpose of the government regulator is to prevent rather than to create something.

There is nothing to guarantee the superior judgment, knowledge, and integrity of an inspector or a bureaucrat—and the deadly consequences of entrusting him with arbitrary power are obvious.

Anything that we can do to raise personal savings is very much in the interest of this country.

History demonstrates that participants in financial markets are susceptible to waves of optimism. Excessive optimism shows the seeds of its own reversal in the form of imbalances that tend to grow over time.

I know that you think you know what I said. But I'm not sure whether you understood that what you heard is what I meant.

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense—perhaps more clearly and subtly than many consistent defenders of laissez-faire—that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

Deficit spending is simply a scheme for the confiscation of wealth.

That said, there can be little doubt that exceptionally low interest rates on ten-year Treasury notes, and hence on home mortgages, have been a major factor in the recent surge of homebuilding and home turnover, and especially in the steep climb in home prices. Although a “bubble” in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels.

The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit, which, according to the Congressional Budget Office, will rise significantly as the baby boomers start to retire in 2008. Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances.

Capitalism is based on self-interest and self-esteem; it holds integrity and trustworthiness as cardinal virtues and makes them pay off in the marketplace, thus demanding that men survive by means of virtue, not vices. It is this superlatively moral system that the welfare statists propose to improve upon by means of preventative law, snooping bureaucrats, and the chronic goad of fear.

The reason there is very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue.

History has not dealt kindly with the aftermath of protracted periods of low risk premiums.

American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage.

While local economies may experience significant price imbalances, a national severe price distortion seems most unlikely in the United States, given its size and diversity.

Without calling the overall national issue a bubble, it's pretty clear that it's an unsustainable underlying pattern.

Cash is available and we should use that in larger amounts, as is necessary, to solve the problems of the stress of this.

It did not go without notice that Ayn Rand stood beside me as I took the oath of office in the presence of President Ford in the Oval Office. Ayn Rand and I remained close until she died in 1982, and I'm grateful for the influence she had on my life. I was intellectually limited until I met her.

It's hard to overemphasize how important how important Ford's deregulation was. True, most of the benefits took years to unfold—rail freight rates, for example hardly budged at first. Yet deregulation set the stage for an enormous wave of creative destruction in the 1980s.

We generally did not talk about the stock market very much at the Fed.

The Fabians laid the groundwork for modern social democracy, and their influence on the world would end up being at least as powerful as that of Marx.

In general, corruption tends to exist whenever governments have favors to extend, or something to sell.

An area in which more rather than less government involvement is needed, in my judgment, is the rooting out of fraud. It is the bane of any market system.

From the development of the textile loom two centuries ago to today's Internet, output per hour has increased fifty fold.

Much of the securitization took the form of collateralized debt obligations (CDOs) with senior credit tranches certified by rating agencies as AAA. It was the failure to properly price such risky assets that characterized the crisis.

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