Do you think Alan Greenspan really thought that the “bubble” would never burst?
Question/Comment: It is my belief that Alan Greenspan is a strong follower of Ayn Rand’s philosophy of a free and unfettered economy. Do you think Greenspan really thought that the “bubble” would never burst?
Paul Solman: Greenspan IS (or at least long WAS) a follower of Rand. It’s not that he didn’t believe in bubbles, I don’t think. It’s that he thought our economy was resilient enough to work its way out of them.
Also, as he said before Congress recently, he thought market participants would be wise enough to maximize their own interest and would therefore self-regulate. How he could think this, given the history of truly unfettered markets, remains something of a mystery. At least to me.