WurfWhile

Federal Reserve Chairman Alan Greenspan’s Senate testimony January 25, 2001:

“The most recent projections…make clear that the highly desirable goal of paying off the federal debt is in reach before the end of the decade.
….
But continuing to run surpluses beyond the point at which we reach zero or near-zero federal debt brings to center stage the critical longer-term fiscal policy issue of whether the federal government should accumulate large quantities of private (more technically nonfederal) assets. At zero debt, the continuing unified budget surpluses currently projected imply a major accumulation of private assets by the federal government….

I believe, as I have noted in the past, that the federal government should eschew private asset accumulation because it would be exceptionally difficult to insulate the government’s investment decisions from political pressures. Thus, over time, having the federal government hold significant amounts of private assets would risk sub-optimal performance by our capital markets, diminished economic efficiency, and lower overall standards of living than would be achieved otherwise.

Short of an extraordinarily rapid and highly undesirable short-term dissipation of unified surpluses or a transferring of assets to individual privatized accounts, it appears difficult to avoid at least some accumulation of private assets by the government.

Private asset accumulation may be forced upon us well short of reaching zero debt…. Some holders of long-term Treasury securities may be reluctant to give them up, especially those who highly value the risk-free status of those issues….

Decisions about what type of private assets to acquire and to which federal accounts they should be directed must be made well before the policy is actually implemented, which could occur in as little as five to seven years from now.”

Over seven years later…

… the Federal government has begun to take over private assets. These deals, far from being well-planned, have resulted from reactions to crisis conditions in the markets.

… the amount of public debt has increased each year of the Bush Administration, continuing this year, and thanks to our current economic crisis we are further than ever before from paying it off.

… the crisis in our capital markets has diminished economic efficiency, destroyed American and world wealth, and continues to threaten further reductions in our standard of living.

… America has moved from a budget surplus to record budget deficits of over $400 billion during the Bush Administration, Greenspan and GOP congressional years of dominance - with next year looking to again reach a record amount.

… in order to accommodate the Federal Reserve’s need to purchase private assets, the Treasury has begun selling more bonds. The demand for U.S. Treasury Bonds has driven the yield into negative territory (i.e. investors were willing to take a loss) for the first time since 1940.

… former Chairman of the Federal Reserve, Alan Greenspan, believes this crisis is the worst he’s ever seen - “a once-in-a-century event.”

From paying off the debt in decade to a ‘one in a hundred year’ market crisis, that’s the legacy of Alan Greenspan, George Bush and the GOP that supported them (along with some Democrats who should have known better). Anti-regulation policies have shown themselves bankrupt - and their supporters have left American taxpayers with the bill.