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1 mikiesmoky2  Thu, Nov 17, 2011 1:20:37am


Alan Greenspan’s testimony before the Senate’s Committee on the Budget on January 25, 2001, was SCRIPTED for him for the strategic purpose of enabling the 2001 tax legislation.

Mr. Greenspan assisted in causing the 2000 recession with the Fed’s increases in early 1999 to reach a 6% federal funds rate during a 2% inflation period (remember Goldilocks??).

At the end of 2000, Mr. G and the Fed panicked, i.e., their efforts to cause a recession going into the 2000 elections worked too well.

On January 3, 2001, the Fed reduced rates by 50bps.

When the economics are strong, the Fed has the “tendency” to increase rates to “slow” the economy.
When the economics are weak, the Fed has the “tendency” to reduce rates to stimulate the economy.
These incremental changes are normally 25bps (1/4 of 1%).

Since the reduction on January 3, 2001, was 50bps, the Fed appeared to have perceived more than a slight weakness in the economy.

Now comes his testimony, 22 days after the apparent “panic”:
He said that his #1 concern was that it would be problematic when we pay off the national debt with the projected “burgeoning” surpluses!!!

The two phenomena on Jan. 3 and Jan. 25 appear to be in conflict, i.e., oxymoronic, i.e., how could there be “burgeoning” surpluses if the economics were weak???

Whereas it is possible that, during that intervening 22 days, Mr. G and the other members of the FOMC accumulated additional data that caused a change in their collective perception, EXCEPT that 6 days later, on the 31st, there was another 50bps reduction AND 300bps more during the next 8 months.

REPEATING: The 2001 tax legislation was a setup.

Senator Obama said that if he were elected, he would reverse the Bush tax “cuts” for those with taxable incomes in excess of $250,000.
After he was elected, he “decided” to allow those subject tax “cuts” to expire on December 31, 2010, in accordance with the sunset provisions.
Finally, on December 17, 2010 (a date that should live in infamy), he signed legislation allowing the “cuts” to continue for another two years.
He claimed that it was the wrong thing to do, but he had no choice because the Republicans were holding HOSTAGES. The hostage-taking was his get-out-of-jail-free card, which enabled him to sign the legislation.

CONCLUSION: Yes, there is “class warfare” and it began, in earnest, in 1981, causing a massive shift of wealth from the middle-class to the top 0.1% of income recipients.
This phenomenon has adversely affected our capitalistic engine.


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