[Moneyverse] Market Oversight by a Market Worshipper

'Atlas Shrugged' was ranked second, just after the Bible, in a survey of "the books that have had the greatest impact on Americans' lives." This is the recognition received by the novel. The publisher Humanist, which translated and published the book, said that this reputation continues, noting, "After the United States experienced its worst economic crisis, sales surpassed 500,000 copies in 2009 alone."

This novel begins with the premise that, in a society where government regulation and collectivism are on the rise, entrepreneurs, inventors, and intellectuals declare a strike and suddenly disappear without a trace. As chaos spirals out of control, society descends into ruin. Through this setup and conclusion, 'Atlas Shrugged' advocates for a liberal market economy.

The author is Ayn Rand (1905–1982), a Russian-born Jewish writer who was active in the United States. Born into a wealthy family, Rand experienced the confiscation of all her family's assets during the Russian Revolution of 1917. She emigrated to the United States in 1927.

The person most deeply influenced by 'Atlas Shrugged' and Ayn Rand, and who amplified that influence to the greatest degree, was former U.S. Federal Reserve (Fed) Chairman Alan Greenspan. Greenspan, who passed away at the age of 100 on June 22, considered Rand his ideological mentor and was her devoted follower. In the 1950s, he was a member of the philosophical club that Rand ran in New York. In the 1960s, he gave ten lectures on "The Economics of a Free Society" at an organization established to promote Rand's philosophy.

"He shared market-oriented and pro-capitalist principles with Rand." The book 'Maestro' (2000), which hailed Greenspan as a "maestro," stated this. According to the book 'The Greenspan Effect,' Greenspan said, "After meeting Ayn Rand, I came to believe in the moral power of capitalism."

After being appointed Fed Chairman in 1987 and serving until 2006, Greenspan became a staunch believer in the market and actively protected it. The term "Greenspan put" was coined to describe this stance. It refers to the measures taken by Greenspan's Fed to support the market by cutting interest rates and injecting liquidity in response to stock market crashes.

Greenspan was quick to embrace the "new economy" thesis, advanced by some on Wall Street, which claimed that a productivity revolution based on computers and the internet would enable long-term growth without fueling inflation. He then enthusiastically spread the new economy fantasy. The dot-com bubble, fueled in part by his new economy optimism and low interest rates, collapsed in 2000.

Even after that, his reverence for the market remained unshaken. Regarding subprime mortgage loans, he praised them as "an example of how technological advances have greatly increased the efficiency and scale of the financial services industry." He ignored warnings within the Fed. For example, in May 2004, Fed Governor Edward Gramlich proposed "a thorough investigation of banks' compliance," describing it as "a good defense against predatory lending." However, in May 2005, Greenspan countered by saying, "Market discipline has generally been far more effective than government regulation in curbing excessive risk-taking." The resulting collapse of the second bubble plunged the world into a severe recession for several years.

When a market worshipper is put in charge of market oversight, he can actually spread and amplify market risks. This is the unintended legacy that Greenspan left behind.

Baek Woojin, Economic Columnist

This content was produced with the assistance of AI translation services.