Greenspan’s Fraud

 Greenspan’s Fraud: How two decades of his policies have undermined the global economy is an ambitious and bold book by Dr. Ravi Batra, professor of economics at Southern Methodist University in Dallas (Texas). This book is a direct, harsh, and explicit critique of Greenspan and his policies during the years he was the Fed Chief. Professor Batra blames Greenspan for most of the economic failures during his time at the Feds and later. The most interesting and provocative characterestic of the book is not only that Greenspan is held responsible for many economic problems, these problems are clearly attributed at times to stupidity and naivity and at other times to deception and fraud. Professor Batra discusses Greenomics- Greenspan’s economics- and finds that it was based on what Wall Street wanted, rather than on sound economic theory. The book’s conclusion (and assumption) is that Greenspan committed an intellectual and financial fraud on the American people, which resulted in substantial negative impact on the economy of the U.S. and the world.

Alan Greenspan was revered around the world for his leadership of the U.S. Federal Reserve. As Professor Batra acknowledges in his book, Greenspan was decorated by the Legion of Honor by France and knighthood (Knight of the British Empire) by England. However, this global reputation of Alan Greenspan has suffered seriously in the aftermath of the 2008 housing crisis. CNN has included him in its Hall of Shame of 10 people most responsible for the crisis in the economy. Italy’s foreign minister is believed to have said that Greenspan ranks only after Bin Laden in hurting America. Greenspan himself accepts that the (2008) economic situation is worse than it has ever been in his life. (An interview with Alan Greenspan about how he could have missed that such a crisis was coming can be found here. For those who prefer humor, here’s Alan Greenspan explaining what his role as Fed Chair was). 

It is obvious that Alan Greenspan’s reputation has suffered, perhaps irrepairably, due to the economic crisis that has occured so soon after his leadership at the Federal Reserve. Professor Batra’s book presents an unflattering picture of Alan Greenspan that most people usually do not get to hear about. If the reader is willing to overlook Professor Batra’s obvious dislike of Alan Greenspan and his policies, the book can be helpful in learning about things that have been relatively less recognized and discussed in the media and in policy circles.

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13 Comments

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13 responses to “Greenspan’s Fraud

  1. Melissa Mandras

    Starting to read this book by Ravi Batra, I have to remember to keep an open mind. There seems to be a biasness against Alan Greenspan in the beginning of the book that he set the US economy up for failure. Given our current financial crisis, it is interesting to see what Batra’s points are as to what Greenspan has done wrong, but it is important to me to simply look at the facts to determine an actual answer for myself. As the book continues I hope to see a clear distinction between Greenspan’s policies and the affect they have had or will have on the US but at this point I only see finger pointing at what Greenspan has doen incorrectly. Already one of the most interesting facts I have noticed is the fact that Greenspan has been through numerous presidencies, and, as Batra points out has had different policies with each presidency. He has increased social security taxes, then decresed them. He also as Batra points out has kept social security surpluses separate from the General Fund and then has brought them together. Although I am trying to remain unbiased while reading, I definitely am seeing flaws in Greenspan’s policies and it is interesting how many of the “frauds” Batra speaks of are directly related to today’s current crisis.

  2. Sean Stetttin

    Greenspan’s Fraud is an attack on Alan Greenspan, former chairman of the Fed. It is an interesting book that shows a side of Alan Greenspan that i did not know before. We all have glorified the man and his policies over his reign but never criticize his mistakes. The author, Ravi Batra, tells us that Greenspan was the most unlikely person to be head of the fed and was very under qualified for the position. Everything he does, he does for personal gain, trying to appease everyone and offend no one. He switches his mind on policies over and over. He says one thing and does another, tricking the American public. The book is very interesting to read at this point in time due to the current credit crisis. Many of Greenspan’s policies in the 1980’s especially dealing with tax cuts and social security, led way to the present situation. I have always heard that Greenspan helped to save the economy in the 1980s, but the facts that Batra mentions, although biased, show how he actually helped to ease taxes for the rich and made it much harder for lower income families, harming the economy.

  3. Andrew Perez

    “Greenspan’s Fraud” is the perfect book to learn about who Alan Greenspan really is. I have read half of the book so far and I am beginning to notice some trends about Mr. Greenspan. His policies are geared towards himself affluent politicians, like himself, at times he would say one thing to the public and commit intellectual fraud while doing something else, and being a massive flip flopper. Some policies that have put Greenspan in a position to line the pockets of the wealthy are a hike in payroll taxes and supporting tax cuts for the wealthy while George W. Bush was in office. Greenspan certainly knew how to deceive the public by saying one thing and doing another. A prime example of this was Greenspan alarming the public about the health of the Social Security Fund. Greenspan planted that seed for the purposes of raising money to lower the budget deficit. Greenspan displayed many flip flopping tactics over the course of his long career as the Fed chairman. Such flip flops include creating policies that help out Wall Street, and then when Wall Street becomes the enemy, gravitate to the President. Greenspan also flip-flopped while Bill Clinton was in office, supporting Clinton ideas and policies. Once Clinton was no longer around, Greenspan went back to his own beliefs and theories (Greenomics). Reading this book is really opening up my eyes to the past thirty-plus years of the United States economy. I think Batra’s points help the reader understand some of the effects of Greenspan’s policies. This books makes you question why our current economy is the way it is.

  4. Ertan Arslan

    The book Greenspan’s Fraud by Ravi Batra argues why the legendary icon Alan Greenspan is actually not that legendary. When Alan Greenspan was in charge as the chairman of the Fed. the rich people became richer and he has protected the big businesses but the middle class lost a lot. He had many insufficient and inconsistent works on the taxes, wages and social security. Ravi Batra believes Alan Greenspan’s works are the main reason of the economic crisis. As a matter of fact Alan Greenspan was not the first choice of Wall Street but that was politics and the president Ronald Reagan wanted him take the seat. The Fed. chairman had this great power over the interest rates and the banks. He affected all the world. He was the “maestro” of his job for people. He had this enormous political power but he was two-faced. He made people believe that he is on their side, but in action, he did the opposite. This book mainly criticizes Alan Greeenspan’s contributions. He was very selfish that he took his actions not according to the people but himself. He had benefitted from the decisions he had given but many people around the world and in US had lost. There was no problem for him because he was earning. He even had changed his own opinions from time to time in order to earn. He led the high unemployment ratio and the high tax rates. He had an opinion about everything that affects the economy. He was two-faced, made social security fraud and the word Ravi Batra uses to explain the other issue is “Greeenomics”. This book helps the reader to better understand what is going on actually besides the way they seem.

  5. Maria-Christina Herrera

    Ravi Batra’s book, Greenspan’s Fraud, is a deeper look into Alan Greenspan and the policies set forth by him that have greatly affected the economy of not only the United States but also countries worldwide. While many people believe him to be a, “darling of Wall Street and investors all over the planet (page 2)”, Batra argues the opposite. In looking at Greenspan’s background, one can understand Batra’s reasoning for believing Greenspan to have acted fraudulent. His credentials were mediocre and he had far less experience and knowledge in the economic field. It’s clearly seen that his resume was built upon friendships he made with people of higher power. Batra claims that Alan Greenspan had set forth policies that hurt the American worker and along the way, benefited himself. It seems that Greenspan’s policies benefited the wealthy and big businesses. Regarding Social Security, the Social Security tax applied equally to everyone. Therefore, the rich were paying similar taxes to those who made minimum wage. Along with this, the revenue received from the Social Security tax was used to pay for the deficit in the general federal budget (page 19). Currently, there is little money to cover Social Security, and the government having a deficit, despite taxing American citizens. While I knew little about Greenspan before this book and despite the bias against him portrayed in this book, I can definitely see the many reasons why people think negatively of him. As I continue on reading, I hope to better understand what Greenspan has done in the past, and formulate my own opinion.

  6. Evan Gabriel

    Greenspan’s Fraud is a book that chronicles the celebrated career of Alan Greenspan career as a economic leader, and offers a unique conflicting position against our former Fed chairman. While so far the book is clearly taking a biased look against Greenspan, it is interesting to see such a pointed analysis before it was popoular to do so. Just simple facts that I have picked up on so far, like the extent of Greenspan’s effect on economic policy for such an extended period of time, and the idea that most of his policies always earned him more revenues for himself. I believe that in such a position as Greenspan’s everyone can be made to look bad, so I am interested to see how this book progresses and if there is substantial substance to the authors claims.

  7. Lillian Smith

    Greenspan’s Fraud gives an interesting look into Ravi Batra’s opinion of Alan Greenspan. Batra begins the book by giving some background of Greenspan and the time period he served as chairman of the Federal Reserve. When Greenspan started as chairman of the Fed he had no previous banking experience and was not even considered to be an amazing economist. He came into this position 2 months after the stock market crash of 1982 and was praised for the way he handled the situation. From that point on the world was infatuated with him. This book gives an opposing view as it explains how Greenspan did not save our economy but really lead it to crash.
    Batra specifically focuses on unveiling Greenspans views on social security and tax legislation, the minimum wage and unemployment and other economic policies. He claims in this book that Greenspan committed fraud on two levels, financial and economic. I am interested to read further to learn more specifics about Greenspan’s policies and come up with my own opinion about the topic.

  8. Andrew Perez

    While reading the middle part of the book I am really enjoying the section that pertains to the wage gap. Batra shows that an increasing wage gap in the United States is not good for the economy. This concept really does expose Greenspan, because interestingly Batra illustrates that Greenspan is caught contradicting himself. Wages need to go up in relation to productivity, therefore the minimum wages of workers needs to rise so that the poor and middle class (the majority of the United States workers that provide to the GDP) can stimulate the economy. Greenspan is found to showing strong opposition to having a minimum wage. Another topic that I find interesting is how Batra points out the similarities of present day to the 1920s and the Great Depression. Also, Batra really emphasizes that our current economy is weak due to the high taxes the poor and middle classes are paying, in comparison to the upper class’ relatively low tax rate. If our government taxed the upper class the way they did in the 50s and 60s, I think our economy would improve for the better.

  9. Andrew Perez

    Towards the end of the book, the section that was very intriguing to read pertained to the minimum wage creating unemployment. Greenspan strongly believes that the minimum wage is harmful to the labor force and the economy, because it creates unemployment in small businesses, restaurants, hotels, etc., due to the large amount of jobs that require unskilled labor. Batra argues that Greenspan’s theory here is flawed as long as the rise in the minimum wage does not exceed the rate of inflation. Batra also shows that employment and economic growth generally improved whenever the minimum wage went up to match the rate of inflation. I think this very interesting. Batra is able to once again show that Greenspan was the type of leader that had such strong beliefs to things that didn’t make any sense. I think Greenspan would strongly believe in something that is false, so that he could enhance his income and the incomes of the upper class by favoring other policies. Here it makes sense that if the minimum wage increases, the larger part of population will , the poor and middle class, will make more money. This will help improve our economy because more money will be spent by these populations. If the minimum wage were to decrease, aggregate demand as well as demand growth will fall. GDP growth would also decline.

  10. Kaylin Collins

    This book shows Alan Greenspan to be a controversial figure. While he is considered “Wall Street’s darling celebrity”, Ravi Batra does an excellent job of showing another side to Greenspan. Batra begins the book by showing how the man who has been called by some “the Maestro” and the best economist ever had insufficient credentials to hold the positions of power he was given, such as chairman of the Federal Reserve. He seemed to obtain positions such as these due to favoritism and his charisma and has been able to immensely influence the world with contradictory economic theories and policies. Batra then shows how Greenspan committed what he calls social security fraud; he illustrates how Greenspan, along with the wealthy in general and big businesses, personally benefited from the tax advice he gave, while millions of average American workers, the middle class, and the self-employed suffered and saw a dramatic rise in their tax bills. Batra says that what he did could be considered fraud because he advised lawmakers to trim Social Security benefits, therefore violating what he had previously told American workers, and also lied to the public about where their money was going. Batra then introduces Greenspan’s relationship with Ayn Rand; he shows how together these two influential figures supported “rational selfishness”, disliked government intervention of any sort that interfered with businesses’ profits, and thought capitalism was efficient, practical, and moral. The start of this book gives the reader a very clear picture of the other face of Alan Greenspan and shows him to be a figure that committed multiple types of fraud that negatively affected the majority of the American population.

  11. Maria-Christina Herrera

    After finishing Ravi Batra’s book, Greenspan’s Fraud, I was able to see the significant affect Greenspan made not only for the United States economy as well as its politics, but the ramifications worldwide because of the his power and influence. Greenspan was able to influence powerful political figures, such as Reagan, Bush, and Clinton. His ability to change inflation, increase the amount of money, change international monetary policies, assist in the demise of American manufacturing, increase the wage gap, and ultimately hurt the middle and lower class in order to the benefit the higher class, such as himself. In the end, in helped in putting our economy in a state of stagflation. His ability to affect the success of the stock market as well as influence the public and the corporation into investing their money, but in the end losing that money. His tax cuts for the rich and the losses of the less fortunate were due to Greenspan.

  12. Kaylin Collins

    The middle section of this book further helps illustrate and paint a more accurate picture of Greenspan’s true character. Batra shows how over nearly three decades, Greenspan changed his views and opinions to maintain his position of power; he specifically referred to this as committing intellectual fraud. He used his intellect to offer theories with absolutely no historical basis that contradicted themselves to, once again, benefit himself and others like him. An example of this can be seen in the “robber baron taxation” he supported, which robbed the poor through high payroll taxes in 1983 and rewarded the wealthy through cuts in income tax rates in 1981. Greenspan not only negatively affected the American economy with his contradictory policies, but brought harm to the rest of the world as well; through his actions, he allowed investors worldwide to believe that the Fed would always bail them out in hard times, which in turn made many people more willing to take larger risks with their money. Greenspan’s “partial knowledge”, as Batra called it, which referred to his sole focus on productivity and subsequent inability to realize the important role debt plays in any stock market bubble, eventually left the world in shambles, overtaken by recession, stagnation, and depression. It is amazing to see how much one man’s policies could affect not only America, but the entire world, leaving it in shambles in the long-run.

  13. Kaylin Collins

    By the end of Greenspan’s Fraud, Batra had me fully convinced of many of his allegations pertaining to Greenspan’s character and “other face.” I found it interesting that he stated that it was obvious that if you put substantial tax rate increases on the wealthy, then the growth rate would slow down; this statement proved once again how his beliefs and theories were contradictory, misleading, and meant to benefit the affluent, like himself. He also showed his true colors and tendencies toward benefitting the affluent in the fact that he was unsupportive of a minimum wage rate, claiming that it creates unemployment and is harmful to the economy. Greenspan held so much power and influence worldwide that he was able to change international monetary policies, hurt American manufacturing, and increase the wage gap; so many of his actions hurt a significant amount of people and for a long time, his motives were hidden from most. Batra sums this up perfectly in the statement “you can fool all markets some of the time, or some markets all of the time, but you cannot fool all markets all the time.” Greenspan’s fraudulent policies and actions eventually caught up to him, in the fact that people like Batra were able to realize what he was doing and all he was truly responsible for.

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