top of page
  • Writer's pictureJeff Matthews

‘The Undertaker’ and His Economic Doobie Brothers

Greenspan Says Dollar’s Decline Has No `Real’ Impact

—Bloomberg, November 18, 2007

Anybody else out there think the original title of Alan Greenspan’s recent memoir of his time as Federal Reserve Chairman (“The Age of Turbulence”) must have been something closer to “Purple Haze, All in My Brain, Rainy Days You Don’t Seem The Same, One Pill Makes You Larger and One Pill Makes You Small, but I Get High With a Little Help From My Friends so Why Does it Feel Like They’re All Staring At Me???”?

I mean, how else to explain the following statement by the man Ayn Rand used to call “The Undertaker” ostensibly because of the dark suits and sober demeanor he wore during their smoke-filled late-night debates, although I am coming to believe both his demeanor and the smoke actually owed more to some lethal Maui Wowie he must have kept stashed in the lining of his Brooks Brothers’ vest pockets, if you get my drift:

Nov. 18 (Bloomberg) — Former Federal Reserve Chairman Alan Greenspan said the dollar’s decline hasn’t affected the global economy and is a “market phenomenon.” “So long as the dollar weakness does not create inflation, which is a major concern around the globe for everyone who watches the exchange rate, then I think it’s a market phenomenon, which aside from those who travel the world, has no real fundamental economic consequences,” he said today. Huh? Did he really say a falling Dollar has no real fundamental economic consequences? What’s with Fed Chairmen these days?

First Greenspan’s successor flatly denies the deflationary impact of the Chinese labor arbitrage (see “Fed Big Flunks Eco 101” from March 7, 2007) of the last decade, and now Greenspan himself claims to see no link between the falling value of the U.S. Dollar and inflation in the United States.

Regarding the former issue, readers may recall that I offered to put Mr. Bernanke in touch with an American businessman who experienced first-hand the massive and deflationary impact of China’s manufacturing policy throughout the last decade.

I now offer to put Mr. Greenspan in touch with an American businessman who is currently experiencing first-hand the massive and inflationary impact of the recent collapse in the U.S. Dollar.

His name is Ron Moquist, and he is the CEO of Raven Industries Incorporated.

Now, Mr. Moquist wouldn’t know me from Alan Greenspan, but I do listen to enough conference calls during the week to stay current on companies such as his.

And his company’s recent earnings call provided just the sort of real-world insight into the real-time economic impact of the weak Dollar that Mr. Greenspan seems unable to see—perhaps owing to the lingering after-effects of all those days “discussing economic policy” with Ayn Rand and the rest of the Economic Doobie Brothers in those smoke-filled rooms: You would think that with weak U.S. demand for plastic resin, prices would be — resin prices would be soft, but with the cheap U.S. dollar, a lot of the product is being shipped to foreign markets, which keeps the demand high, and with those higher material costs we haven’t been able to pass along all those increases, just because of the competitive pressures. And that pressure is being driven by the dramatic drop in construction activity, not just residential construction but commercial and manufactured housing as well. These various construction markets currently add up to almost 40% of our total sales volume in Film, so it is a big factor.

—Ron Moquist, Raven Industries November 15, 2007

Maybe, technically, those Doller-related cost increases aren’t getting into the Fed’s computation of the Producer Price Index, adjusted as it is to exclude everything people actually use; but the impact on businesses such as Raven Industries is as real as the 4.9% price increase UPS just announced for next year.

Ironically, Greenspan made his Dollar comments at the “Learning Annex Wealth Expo” in New York City. No doubt The Donald was also there, and possibly Tony Robbins, giving their sure-fire get-rich-quick methodologies.

I wonder if David Crosby and Keith Richards were also in the wings, anxiously waiting to score some, er, Bolivian Marching Powder, if you get my drift, from the man they call “The Undertaker”…

Jeff Matthews I Am Not Making This Up © 2007 NotMakingThisUp, LLC

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations. This commentary in no way constitutes investment advice, nor is it a solicitation of business in any way. It is intended solely for the entertainment of the reader, and the author.

2 views0 comments

Recent Posts

See All

Beware Elites Interpreting History

It has the slam-bang certitude of an indignant Tweet: “In an excerpt from his new book, Lincoln and the Fight for Peace, CNN’s senior political analyst and anchor [John Avlon] shows how racist elites

Donald Immelt?

“It became clear right away that my main role would be Person to Blame,” Mr. Immelt writes in his new book “Hot Seat: What I Learned Leading a Great American Company,” which will be published Feb. 23.



Stay up to date with an insider's look into The World of Wall Street.

Great! You're all signed up.

bottom of page