{"id":18503,"date":"2016-03-06T15:07:02","date_gmt":"2016-03-06T20:07:02","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18503"},"modified":"2016-03-06T15:07:34","modified_gmt":"2016-03-06T20:07:34","slug":"alan-greenspans-pickled-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18503","title":{"rendered":"Alan Greenspan\u2019s Pickled Economy"},"content":{"rendered":"
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Alan Greenspan\u2019s Pickled Economy\u00a0<\/a><\/h3>\n<\/div>\n
Winter of Discontent<\/strong><\/div>\n
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Former Federal Reserve Chairman Alan Greenspan resurfaced this week.\u00a0 We couldn\u2019t recall the last time we\u2019d heard from him.\u00a0 But, alas, the old fellow\u2019s in desolate despair.<\/p>\n

\"Alan-Greenspan\"Unexpectedly rising from the crypt: Alan Greenspan \u00a0\u00a0Photo credit: AP<\/p>\n

On Tuesday, for instance, he told\u00a0Bloomberg<\/a>\u00a0he hasn\u2019t been optimistic for \u201cquite a while.\u201d\u00a0 Obviously, this is in contrast to the perennial Goldilocks attitude he had during the 1990s.\u00a0 So what is it that has the Maestro playing a low dirge?<\/p>\n

China, the dollar, Dodd-Frank, and associated unknowns are all part of his negative outlook.\u00a0 But the long winter of his discontent is something else.\u00a0 Greenspan said he \u201cwon\u2019t be [optimistic]<\/em>\u00a0until we can resolve entitlement programs<\/em>.\u201d<\/p>\n

\u201cNobody wants to touch [entitlements].\u00a0 But it is gradually crowding out capital investment and that is crowding out productivity and that is crowding out the standards of living<\/em>,\u201d said Greenspan.<\/p>\n

Indeed, funding entitlement programs is becoming more burdensome by the year.\u00a0 As a greater percentage of the economy\u2019s GDP goes toward entitlement programs, a lesser percentage goes towards capital investment.\u00a0 The effect of this negative feedback loop, as Greenspan infers, is quite simple.<\/p>\n

\"ramirez-entitlement-cartoon\"An enticing lure\u2026. \u00a0\u00a0Cartoon by\u00a0Michael Ramirez<\/span><\/p>\n

Less capital investment leads to lower productivity.\u00a0 Lower productivity leads to slower GDP growth.\u00a0 Slower GDP growth leads to an economy that can\u2019t keep pace with entitlement programs.\u00a0 Thus, an even smaller percentage of GDP is, in turn, available for capital investment\u2026to propel future growth.\u00a0 And so on, and so forth.<\/p>\n

\"1-SR-fed-spending-numbers-2012-p8-1-chart-8_HIGHRES\"<\/a>A 2012 forecast of entitlement spending by the Heritage Foundation. This seems not exactly sustainable \u2013 click to enlarge.<\/p>\n

What Drives Economic Growth?<\/strong><\/p>\n

Certainly, this is a basic insight.\u00a0 But perhaps Greenspan is on to something much larger than just the issue of entitlement programs.\u00a0 From what we can tell he\u2019s getting at the question of economic growth.\u00a0 Namely, what drives it?<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n

 <\/p>\n

 <\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Alan Greenspan\u2019s Pickled Economy\u00a0 Winter of Discontent Former Federal Reserve Chairman Alan Greenspan resurfaced this week.\u00a0 We couldn\u2019t recall the last time we\u2019d heard from him.\u00a0 But, alas, the old fellow\u2019s in desolate despair. Unexpectedly rising from the crypt: Alan Greenspan \u00a0\u00a0Photo credit: AP On Tuesday, for instance, he told\u00a0Bloomberg\u00a0he hasn\u2019t been optimistic for \u201cquite […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[5728,952,83,1845,240,303,305,353,11763],"class_list":["post-18503","post","type-post","status-publish","format-standard","hentry","category-economics","tag-acting-man","tag-alan-greenspan","tag-bloomberg","tag-dodd-frank","tag-economic-growth","tag-fed","tag-federal-reserve","tag-gdp","tag-mn-gordon"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18503","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18503"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18503\/revisions"}],"predecessor-version":[{"id":18504,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18503\/revisions\/18504"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18503"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18503"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18503"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}