546 ChaPter^10
leader for financial deregulation and not just free but, in essence, reckless
markets. During Greenspan’s time at the Fed [1987-2005], total debt, public
and private, in the U.S. went up over 400 percent—from about $10 trillion to
$43 trillion. As noted, these men publicly advocated “conservative” economic
policies, yet ran up the biggest debts, usually associated with Liberals, in
American history. As one expert described it, “all the rules just went away.
You went from a period, a regime, where people did have at least some con-
cern about going to jail, to a point where everything is legal, and derivatives
couldn’t be regulated at all and nobody went to jail for anything. And looking
back I would say that this period definitely started under Clinton. You abso-
lutely cannot blame this on George W. Bush.”
This new banking system marked the final phase in the “financialization”
of the U.S. and world economy, an evolution one could trace back to
Woodrow Wilson, in which the production and trade of goods had been
replaced as the dominant economy activity by the actions of financial markets.
Over the past few decades, as manufacturing had declined from 25 percent to
13 percent of the GDP, financial services [which include not just bankingFIGuRE 10-12 Alan Greenspan testifying before the House Senate Economic
Committee, 197 5