Greenspan Worries That ‘Crazies’ Will Undermine the U.S. System

The World Bank Group And International Monetary Fund 2013 Spring Meetings

Alan Greenspan

Photographer: Andrew Harrer/Bloomberg
  • Former Fed chief doesn’t spell out whom he is referring to
  • Says economic and political environment is worst he’s seen

Former Federal Reserve Chairman Alan Greenspan voiced concern that the U.S. economic and political system could be undermined by what he called “crazies.”

“It is the worst economic and political environment that I’ve ever been remotely related to,” Greenspan, 90, told a conference in Washington Tuesday evening sponsored by Stanford University and the University of Chicago.

On the economic front, the U.S. is headed toward stagflation -- a combination of weak demand and elevated inflation, according to Greenspan. “Politically, I haven’t a clue how this comes out.”

“We’re not in a stable equilibrium,” he said. “I hope we can all find a way out because this is too great a country to be undermined, by how should I say it, crazies.”

Greenspan, who served from 1974-1977 in the Republican presidential administration of the late Gerald Ford, declined to comment on Wednesday when asked whom he was referring to.

Presidential Campaign

Democratic presidential candidate Hillary Clinton is leading Republican Donald Trump in opinion polls, though her edge over the billionaire has narrowed. In winning his party’s nod, Trump ran a populist campaign, pledging to build a wall to keep out illegal immigrants coming from Mexico and threatening to slap tariffs on imports from China.

In his comments on Tuesday, Greenspan traced the rise of populism in the U.S. all the way back to 1896, when William Jennings Bryan gave his “Cross of Gold” speech at the Democratic Party national convention opposing the gold standard.

Greenspan repeated his concern on Tuesday that increased government spending on social security and healthcare are crowding out private investment and leading to slower economic growth. He bemoaned the fact that neither presidential candidate was talking about reining in those expenditures.

“Nobody wants to discuss it” for fear of a political backlash, he said.

In the past, Republican administrations on average countenanced bigger expansions in these entitlement outlays than Democrats, Greenspan said. In that regard, former Democratic President Bill Clinton -- Hillary’s husband -- “turned out to be the best Republican,” he said.

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