While reading Time magazine (thanks to a free subscription using airline miles we were never going to actually use for flying), I came across a 10 Questions interview with him. In it, he comments on what happened to his outlook on economics back in 2008. The question asked to him was "what is the biggest change of mind you've had since 2008?" Here's his response:
It changed [when Legman Brothers collapsed] on Sept. 15. Most basic economics up to that point was was based on the presumption that human beings are rational in that they look after their long-term self-interest. My real shock was that what we now call animal spirits has a certain consistency about it -- in other words, you can demonstrate that fear is a far more potent emotion than euphoria or greed. That changed the whole way I look at the world. I started from scratch, going from equation to equation. I learned more in the last two years than I did in the previous 10.This isn't a place to jump into the crash of 2008, or what "animal spirits" are. Quickly though: why are "we" just "now" calling them animal spirits? Who's "we"? Economists? How come it's just happening "now" in 2013? Aren't we advanced enough to have had a term like this back in the 1960s? Shouldn't it just be a name of a person, say Miley Cyrus, or a song like "Roar"? As to animal spirits though I have somewhat of an idea what they are when I'm hungry and delicious penne pasta with homemade meatballs are awaiting me this very moment. I digress.
If I get what Greenspan is saying, he means that in the range of emotions that drive the decisions of consumers - or if you're old school like me, human beings - the rush of making a ton of money or the pursuit at getting it at all costs are not nearly as strong as the overwhelming sense of doom at the loss of it. To gain clarity, the interview pushes on the notion of demonstrating how fear drives us. Greenspan provides an example, clarifying that fear, to him, is nonrationality:
You measure it indirectly by looking at spreads of interests rates, both by credit raiting and by the maturity of the bond. Today, 30-year U.S. Treasury bonds yield more than five-year notes by the greatest margin in history. Long-lived assets are very heavily discounted. It should be a normal recovery. But it is not, because of the high degree of uncertainty.Basically, if you keep your investments as they are, they will yield great returns over time. But because of the volatility in the market, people are pulling out in fear of losing more money, which, as I understand it, perpetuates the problem. We can't see the big picture, only the short term, and for many it's scary.
I am not fascinated by his conclusion that fear is more powerful in this world than euphoria or greed. What I find fascinating is that Greenspan is just now coming to this conclusion. Philosophers have been expounding on this for millennia. Fear is so fundamental to our everyday lives we probably just see it as normal. I see it as another indication that we are not merely rational beings or thinking animals, as materialistic philosophies will tell us, but fallen image bearers of God. When God created us, there was no fear in this world and we had mad crazy access to the Living Creator of all things. After the Fall, what's the first thing Adam and Eve do? They hide. They were afraid. And what happens later? They die. This is speculation, but I submit that the greatest weapon the enemy has over us since death entered the world is fear. The author of Hebrews hints at this when he writes that the devil has the "power of death" and puts us in slavery through the "fear of death" (Hebrews 2:15). Slavery is driven by fear. That foundational fear permeates all other fears in our lives. It even permeates our rationality to the point where we make massive "nonrational" decisions. Perhaps I've seen this most clearly in abusive relationships, where one person won't leave for fear of being alone forever and dying alone.
What are you afraid of? After thinking about it, do you see it as something that drives your decisions, thoughts, and actions more than other feelings or even your rationality?
Yet the story of God is one of true joy and true hope with true redemption. It's where we see the presence of God come into our lives and while we are afraid because of his power and might, he comforts us with the command most given in Scripture, "Do not fear." It's the story of God coming into this world as the flesh and blood man, Jesus Christ, not merely to teach us nice things or tell us to stop being afraid because it's all going to be okay (which we know never works because fear screams "IT WON'T BE OKAY"), but providing freedom from fear through his death!!!
Since therefore the children share in flesh and blood, he himself likewise partook of the same things, that through death he might destroy the one who has the power of death, that is, the devil, and deliver all those who through fear of death were subject to lifelong slavery. -Hebrews 2:14-15It's the death of Jesus that conquers death itself, therefore, any power or fear found in it is caught up in the rubble of its destruction.
By His Grace.