Intellectual Hubris and Allan Greenspan


The impeccable Tom Keene interviewed former Fed Chairman Alan Greenspan and revealed some incredible insight.

Tom Keene: You open your book with a chapter on animal spirits. That doesn’t sound like Alan Greenspan.

Alan Greenspan: It does now. I’m converting to a much different paradigm of how the economy and financial markets work having lived through September 15, 2008. And indeed, this book is essentially a detective story answering my question: How in the world did I and all the other forecasters of note fail to catch the specific time when the break was to occur?

One of the revelations in the interview and the book is Greenspan admitting that his assumptions about human behavior were incorrect. Greenspan is a noted disciple of Ayn Rand. Rand held self-interest as a high virtue and Greenspan was a noted believer that people always behave in their rational self-interest. Most people on some level or another have known that this is not correct. However, when such a powerful individual holds such a sweeping generalization as absolute truth, the consequences for the world economy can be quite dire (as we found out).

Did intellectual rigidity/hubris/dogma contribute to Alan Greenspan’s blindspot? Why did such an obviously gifted and intelligent person adhere to an ideology which limited him from seeing other points of view? Why did it take so long to admit the error?

It takes courage to admit such a massive error. What would an older, wiser Greenspan tell a young Greenspan? It certainly would not be to keep a tight grip on sweeping assumptions. How does this impact the decisions we make every day? Can we ever *know* how things work when it comes to human behavior, finance, and leverage?

Listen to the interview and decide for yourself: 

Former Fed Chair Alan Greenspan: Bloomberg Surveillance

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