Greenspan's Fraud

How Two Decades of His Policies Have Undermined the Global Economy

by Ravi Batra

(c) 2005

Palgrave Publishing

ISBN 1-4039-6859-4

I will quote some paragraphs in the first few pages where Ravi states the theme of the book.

"Greenspan has outlasted at least five presidents, and in the process, become a legend -- a folk hero to investors and lawmakers, but also an anathema to a growing number of critics. Some say he even dwarfs the president of the United States in terms of worldwide influence. "This book is a critical examination of the variety of contributions that Greenspan has made to the American and world economy. There is no doubt that he was and is a controversial figure, but so far no one has accused him of committing fraud. This is not fraud in the legal sense, but in the sense of trickery that seriously afflicted the finances of millions of families in America and possibly around the world. Few understand that the chairman has swayed US tax laws as much as the supply of money and interest rates."

"While it's difficult to read someone's intent, it's also true that one's actions mirror one's mind."

"Greenspan's economics has extracted trillions of dollars in taxes from the American middle class and sharply enriched the rich, who are essentially people like himself and his friends -- millionaires, politicians and businessmen. Furthermore, I will argue that he, more than anyone else, is responsible for the prolonged stagflation in which the United States has been mired since the start of the new millennium. His policies have led to the pooring of America as well as the world, while a tiny minority has raked in millions, even billions in profit."

"George Bush, in my opinion, has strangled the economy only in recent years, while Fed chairman has been going at it since 1981, more than two decades ago."

"At the point of this writing (February 2005), the United States, in the words of The New York Times, is ' a country that needs to borrow $2 billion a day to stay afloat.' Yes indeed, two billion dollars a day. The country needs to borrow this much daily to support the dwindling living standard of the working American."

Just a couple of definitions that will be needed to understand what is presented in “The Social Security Fraud" chapter are needed to understand what the great fraud is.

Payroll Taxes means FICA collected from the individual along with matching funds from the employer. If you are self employed, these "payroll taxes" amount to over 15%. There is a cap to these so a rich person could possibly pay no more than a regular wage earner.

Income Taxes are taxes on income, but do not include payroll taxes.

FICA taxes are collected to pay hospital insurance (HI) and retirement and disability (OASDI, or Old Age Survivor and Disability Insurance).

These supposedly went into a trust fund that had a "$1.5 trillion surplus in just two decades, between 1984 and 2004, and if it had been properly invested, say, in AAA corporate bonds, which offered double-digit yields in the 1980's, it should have earned another trillion by now."

"From the moment the new Social Security tax went into effect, its surplus revenue was used primarily, if not completely, to pay for the shortfall in the general federal budget. Indeed this was done as a matter of routine.

"All the promises that Greenspan, Reagan and Congress had given with great sincerity to the American people were forgotten in a hurry. There was no lockbox in which the Social Security money could be stashed away from the predatory presidents and lawmakers to accumulate for future retirees. As a result, the fund has a few billion dollars of cash to meet its current obligations. For the rest, it has $1.5 trillion of non-marketable government IOUs, while the government itself has a deficit (yearly shortfall) of nearly $420 billion. In other words, after the government overtaxed the average American worker for more than two decades, we are back to where we were in 1983."

"The Social Security surplus simply financed the tax cuts of rich individuals and corporations. Greenspan paid lower taxes, and so did Mr. Reagan, the lawmakers, and their financiers, but millions of other Americans -- the destitute, the middle class, the self-employed, the needy -- saw a giant rise in their tax bills."

"The fraud is not that taxes were raised on the poor and the middle class, but that the government, with Greenspan as its chief economist, spent the money to finance the general budget deficit resulting primarily from repeated cuts in income tax rates."

Ravi Batra does an excellent job of explaining "What Causes a Stock Market Bubble and Its Crash?" He answers questions such as "Does the Minimum Wage Create Unemployment?" and what caused "the Galloping Trade Deficit."

Just interested in your own little problems? What makes you so sure that some of the reasons for those problems aren't outlined in this book?

Ask your library to get this book. Then tell people they need to read it.

Richard