During the interview for the documentary Real Estate 4 Ransom, Prof Michael Hudson discusses Greenspan’s reputation in his formative days on Wall St, discussing a controversial 1966 incident.
Why are real wages falling?
MH: They’ve (wages) been going down because essentially the economy shifted radically throughout the world, starting in 1979, when Margaret Thatcher was elected Prime Minister of England and Ronald Reagan was elected President of here (The USA) … claiming to defend capital. The Reagan Bush Administration in its 12 years, quadrupled American debt by slashing taxes on the upper brackets while sharply increasing taxes on labour.
They increased it largely by having Alan Greenspan create the Greenspan Commission to look at social security and pushing the myth that social security had to be funded out of pre savings, so American labour was essentially taxed 11% between itself and the employers to pay social security and this vast increase in social security taxes was used to lend to the Government(US) to provide it with enough money to slash taxes on the rich and that was Greenspan’s ploy.
He was rewarded by being made head of the Federal Reserve for his actual hatred of labour and his desire that you had to reduce living standards in order to increase the profits of capital.
When I was on Wall Street, Greenspan was hired as part of a study I was doing on the balance of payments of the Oil Industry. And one day my boss, John Deaver came into my office and said he really worried about Greenspan being a part of this report because he was known as a hack that always gave …his clients what they wanted instead of something actual.
So he (JD) gave me Greenspan’s figures on depreciation of oil producing refinery assets in Europe and asked me to find out where the faking is? He said he couldn’t believe that Greenspan by himself wouldn’t of just faked the figures and it took me about a week to figure out where the faking of the figures came out (from) and that was Greenspan had simply picked up depreciation rates relative to output for the United States and projected them onto Europe.
So I went over and talked to his assistant Lucille Woo and she said “it’s all implicit, all implicit” and I confronted her with it and she said “Yes that’s what we did”!
And so, Greenspan was indeed ‘talked off the study’ and we met… John Deaver, David Rockefeller and myself and I was told…Greenspan was such a little bastard that if they fired him, he’d hold a grudge against Chase Manhattan for years and they told me to be the guy to give him the news that we couldn’t use his (laughs) statistics on it and I was a 25 year old economist at the time and he hardly new me at all, so I was the guy that…subsequently became known as ‘the man who fired Alan Greenspan’.
Michael Hudson is a former Wall Street economist. A Distinguished Research Professor at University of Missouri, Kansas City (UMKC), he is the author of many books, including Super Imperialism: The Economic Strategy of American Empire (new ed., Pluto Press, 2002) and Trade, Development and Foreign Debt: A History of Theories of Polarization v. Convergence in the World Economy. He can be reached via his website, email@example.com.