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Greenspan Wanted Housing-Bubble Dissent Kept Secret

As top Federal Reserve officials debated whether there was a housing bubble and what to do about it, then-Chairman Alan Greenspan argued that the dissent should be kept secret so that the Fed wouldn't lose control of the debate to people less well-informed than themselves.

"We run the risk, by laying out the pros and cons of a particular argument, of inducing people to join in on the debate, and in this regard it is possible to lose control of a process that only we fully understand," Greenspan said, according to the transcripts of a March 2004 meeting.

At the same meeting, a Federal Reserve bank president from Atlanta, Jack Guynn, warned that "a number of folks are expressing growing concern about potential overbuilding and worrisome speculation in the real estate markets, especially in Florida. Entire condo projects and upscale residential lots are being pre-sold before any construction, with buyers freely admitting that they have no intention of occupying the units or building on the land but rather are counting on 'flipping' the properties--selling them quickly at higher prices."

Had Guynn's warning been heeded and the housing market cooled, the financial collapse of 2008 could have been avoided. But his comment was kept secret until Friday, when the central bank released the transcripts of Federal Open Market Committee meetings for 2004 and CalculatedRisk spotted it. The transcripts for 2005 to the present are still secret.

"The substantial run-up in house prices, which we have followed in Florida and also see in the populous Northeast and West Coast of the United States, may be at least partially attributable to unusually low mortgage rates influenced by our very accommodative policy," Guynn warned.

But when the Fed released contemporaneous minutes of the meeting, the bank downplayed Guynn's concerns.

"Reports from some contacts suggested that speculative forces might be boosting housing demand in some parts of the country, with concomitant effects on prices, suggesting the possibility that house prices might be moving into the high end of the range that could be consistent with fundamentals," reads the minutes, which were released to the public several weeks after the meeting.

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Did Ayn Rand support the gold standard

and the abolition of the Federal Reserve? I noticed there are lots of people in the comment section trying to use Greenspan's praise of Ayn Rand to discredit Ayn Rand and therefore capitalism, so it would be good to have a good counterargument to that. I searched a little bit and couldn't find anything; any links would be appreciated.

Can't find a direct quote from Ayn on the Federal Reserve,

just this guy's opinion that she opposed it. Good enough.

"[Greenspan] doesn't know that Ayn Rand opposed the Fed?! Every Objectivist knows it. The Fox Interviewer knew it. Anyone who can form a syllogism, and who knows Ayn Rand's major premises knew it."

Ayn Rand wouldn't have supported the bailouts either

Just thought of that; good argument to use. And Greenspan is guilty of that going back many years prior to the recent bailouts when he bailed out Long Term Capital Management in the late 90's I think.

OK, found my answer on the gold standard

"The gold standard, or maybe more specifically gold currency, is strongly endorsed in Atlas Shrugged, Ayn Rand’s huge 40,000 page novel. (I may have exaggerated the number of pages by a modest amount.)"


Now I'm just need to find out what she thought about the existence of the Federal Reserve.

If the Chinese were to

If the Chinese were to suddenly praise the Dalai Lama, would that "discredit" him?

no it wouldn't

good argument to use.