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New Book Shows The Fed's dirty tricks

Saturday, March 29, 2008

Dr. Greenspan's Amazing Invisible Thesis
By JIM MCTAGUE

IN ALL LIKELIHOOD, ALAN GREENSPAN has more honorary Ph.D.s than any living economist, which is no mean feat -- regardless of the chortling chorus of critics who suggest he played midwife to the first great economic crisis of the 21st century and thus is overly lionized as a financial genius. He has honorary degrees enough to fill a fair-sized wall, including parchment from Yale, Harvard, Notre Dame, Colgate, Wake Forest, Pennsylvania, Edinburgh (Scotland). The Doctor-Doctor also received an honorary knighthood in 2002 at Balmoral from Queen Elizabeth II. Sorry to say, this accolade did not come with a suit of armor.

Greenspan, who left the Fed in 2006 but is still consulted as a genius, might find a metallic exoskeleton exceptionally comforting come May, when the University of Texas Press publishes an unflattering book by Robert Auerbach entitled Deception and Abuse at the Fed: Henry B. Gonzalez Battles Alan Greenspan's Bank.

Auerbach, a veteran Fed basher, portrays Greenspan as a real-life Professor Marvel -- who, through double-talk or "garblement," transformed himself into a mighty economic wizard à la Oz. Auerbach strongly implies that Greenspan's 1977 Ph.D. from New York University was obtained in a few months with little more rigor than a matchbook-cover art degree and that Greenspan has kept his Ph.D. thesis secret in order to protect his vaunted academic reputation.
[algreenspan]
Greenspan appears to have taken only a few months to obtain his NYU doctorate in '77.

Although Auerbach's evidence is circumstantial, it certainly is provocative. For years, NYU told the public that, at Greenspan's request, the thesis was locked away from public view in a vault at its Bobst Library. Auerbach himself was told this in January 2004 when he tried to obtain a copy.

"Normally," writes Auerbach, "a Ph.D. dissertation in a field such as economics must be in a form sophisticated enough to be usable in research, must make a contribution to the existing body of knowledge, and must be original, unpublished work. When approved, the Ph.D. candidate is normally required to supply a bound copy of the dissertation, which remains in the university's library and is available for future researchers to consult."

Auerbach, who has a Ph.D. in economics from the University of Chicago (Nobel laureate Milton Friedman was his thesis adviser), kept requesting access to the papers until NYU's provost, David McLaughlin, finally admitted in August 2005 that, "I can tell you that it was the practice of the business school, during the 1970s, not to deposit dissertations with the library. Thus, a copy of Greenspan's dissertation is not in the Bobst Library. We suggest that you contact Greenspan directly in order to obtain a copy of his dissertation."

Writes Auerbach: "Evidently, he wanted me to believe that NYU business Ph.D.s just took their dissertations home and put them in a drawer."

Auerbach says in a footnote that he made no request to Greenspan for a copy because "the publication of a scholarly addition to existing knowledge is the obligation of the university and the Ph.D. candidate."

Barron's is not bound by such academic niceties and requested a copy from Greenspan, as well as a response to Auerbach's assertions. The Maestro's spokeswoman told us that his busy travel schedule precluded him from getting back to us in time for our deadline. As for two inquires to the provost, they went unanswered.

Greenspan, writes Auerbach, obtained his NYU doctorate in a few months, 27 years after earning a master's there. He had just completed a stint as chairman of the Council of Economic Advisers for both presidents Nixon and Ford, when inflation went wild. His performance hardly suggested that he'd one day become a legendary Fed chairman.

Exactly how Greenspan wrapped up his NYU studies in such a short period is unclear, but it appears that his thesis wasn't especially time-consuming. Auerbach cites an earlier biography that says that Greenspan submitted -- instead of a normal Ph.D. dissertation -- some papers totaling 176 pages that he entitled Papers on Economic Theory and Policy. Among them was at least one he'd written earlier.
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Author Robert Auerbach has been tilting at Greenspan for years.

Greenspan and Auerbach, as you have gathered, hardly are boon companions. Auerbach was an aide to Henry Gonzalez when the quixotic Texas Democratic populist, who chaired the powerful House Banking Committee, decided to make the Federal Reserve more accountable to the taxpayers. (Full disclosure: Auerbach has been a source for this writer for years, and writes kindly of me in the book.)

The Fed, which considers itself as sacrosanct as the Supreme Court, treated Gonzalez at best as a mere nuisance and at worst as a garrulous fool.

In the end, the institution paid a steep price for its arrogance: Gonzalez, who is dismissed in a few lines in Greenspan's recent memoirs, discovered heaps of dirty laundry, including the then-Fed chief's infamous 1993 attempt to mislead the Banking Committee about the existence of detailed transcripts of 17 years' worth of Federal Open Market Committee meetings.

Auerbach contends in his book that Greenspan's invisible Ph.D. thesis is symbolic of a career marked by prevarication, cover-ups and a general aversion to making the Fed more publicly accountable. He calls on Congress to "bring the Fed into the Democracy" because "unelected Fed decision makers should not decide what the public should know about how they are running the central bank."

Unlike Greenspan, Auerbach writes: "No one should be given the immense powers bestowed on the Board of Governors and the FOMC without having his or her credentials publicly examined."

If only Greenspan's thesis were available to examine.

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