Former Federal Reserve Chairman Alan Greenspan (pictured left) said he sees the U.S. economy slowing next year as the surge in stocks comes to an end. "The odds are that we flatten out, even though earnings are doing very well," Greenspan said in an interview with Bloomberg Television, referring to the equity market. That flattening out will probably "put some sort of dull face" on the economy in 2010, he added. Greenspan said he expects the economy to grow at a 3 percent to 4 percent annual pace in the next sixth months before slowing down. As a result, unemployment isn't likely to decline much from last month's 9.7 percent rate, he said. Even so, he doesn't expect the economy to relapse into recession next year. – Telegraph

Dominant Social Theme: America's growth economy is in danger of slowing.

Free-Market Analysis: Huh? Whaaa? We must have missed this "growth." Alan Greenspan hasn't though. The man who looks and sounds exactly as a central banker is supposed to look and sound is at it again. We've charted Greenspan's course in the past, and we must admit he is being more predictable than ever as he ages. We used to find him much funnier (long before the current crisis) because he was so evidently playing a part. No one could speak in that convoluted a way without practice. He used to perform publicly as a musician, and we still think he is a bit of a ham. But we are very disappointed that unlike at least some other prominent people, he has grown less apt to speak his mind as he ages. What does he have to lose? His million dollar an hour fee? Perhaps …

In any case, this is a predictable, though unusually imprecise-sounding, Greenspan. In this report, we can see that he is back to conflating stock market growth with a recovering economy. Yet Greenspan knows as much about the manner in which economies work as anyone. He knows full well that given the amount of money central banks have injected, it would likely be difficult for the marts not to benefit. He also knows that a financial recovery is not necessarily a real one.

The article, which starts out so positively – speaking of America's "growth," soon descends into further weirdness, as follows:

The world's largest economy shrank at a 0.7 percent annual rate from April through June, the best performance in more than a year, the Commerce Department said today. An unexpected decline in a gauge of business activity released today, along with a private report showing employers cut more jobs than forecast, indicate a recovery may be slow to take hold.

The former Fed chief said he sees little threat of higher inflation now, even as the economy recovers. In the longer run, inflation will pick up unless the Fed withdraws the stimulus it has pumped into the economy, he said, voicing concern it may come under political pressure to refrain from doing so.

"We are still by any measure in a disinflationary environment," said Greenspan, 83. "Unless we sterilize or unwind the big monetary base we've built up, two, three years out inflation really begins to take hold."

Consumer prices have fallen for six straight months from year-earlier levels, the longest stretch of declines since a 12- month drop from September 1954 to August 1955, according figures from the Labor Department.

The central bank switched to asset purchases as its main monetary-policy tool after cutting its benchmark interest rate almost to zero. Its balance sheet has doubled to $2.16 trillion in the week ended Sept. 23.

The economy is likely to expand at a 2.6 percent annual pace in the second half of 2009, followed by average growth of 2.4 percent next year, according to a Bloomberg News survey of economists. Forecasts for next year range from an expansion of 4 percent seen by MKM Partners to a contraction of 0.1 percent predicted by Mizuho Securities Co.

Bear in mind this is an article with "growth" in its title. The headline leads one to expect a story about growth slowing. But if one reads our reproduced excerpts (or even the entire article), the best one can come up with is "The world's largest economy shrank at a 0.7 percent annual rate from April through June, the best performance in more than a year."

This is "growth?" A slowage of shrinking? Maybe Greenspan means stock market growth. But even the stock market is off thousands from its previous highs, not counting the price inflation which has already taken place – though now Greenspan doesn't anticipate any further price inflation for several years yet. In this, we note, the former former Fed chair is miles away from his current colleagues who are talking endlessly about hiking rates and other measures sooner rather than later.

This is a very confusing article, to us anyway. It begins by talking about growth – though there is no growth that we can spot, at least not in America – and then trots out numerous statistics that by conventional standards are fairly negative.

Next year it is true, the reporters are able to cite consensus recovery figures of some 2.6 percent. But we wonder if this is the same consensus that concluded a few years ago, along with Ben Bernanke, that the world's economy was in no danger of a downturn. We all know how that turned out.

Here's some more "growth" from this positively schizophrenic article (we can hardly help ourselves):

Growth in the near term will be boosted by the inventory cycle as companies bring stockpiles into line with sales and by the rise in stock prices, Greenspan said. The Standard & Poor's 500 Index has jumped 56 percent since its low for the year on March 9, an ascent that's had a "very positive" impact on the economy, Greenspan added.

The index fell 0.3 percent to 1,057.08 today.

"Over the next six months, three or four percent is the right number" for growth of gross domestic product, he said. "The intermediate outlook for both homebuilding and for motor vehicle production is not all that good."

Greenspan, who was appointed Fed chairman in 1987 by President Ronald Reagan and served until January 2006, praised the steps has taken by his successor, Ben S. Bernanke, to help pull the economy out of its worst recession since the Great depression.

"The Fed has done a splendid job," he said.

Every time Greenspan says something positive, the article cites statistics that seem negative. The topper is Greenspan's pat on the shoulder for Bernanke. Maybe Greenspan (today versus yesterday) believes that Bernanke has done a splendid job, but much of the world is still blaming both Bernanke and Greenspan for screwing rates down so tightly they sent America into hyper-drive for much of the 2000s, causing finally a huge boom and bust cycle.

We try to analyze mainstream reporting in a serious way, but this article has moments that to us are almost risible. It reads as if it were assembled by a committee to put a positive spin on what is still a fairly grim picture. Now admittedly it is just one of a thousand articles every day on the economic situation. But it is a featured article on Bloomberg, one of the most important financial sites in America, and it quotes a man who arguably was the most important financial leader in the world for a number of years. Yet it reads like mumbo-jumbo (are we being too harsh?).

Let us be simpler than Bloomberg. The world is verging not on a recovery but on more financial difficulties. There has been no growth, only an artificial inflation of financial marts. The real solution to the world's problems is a gold and silver market-based standard that will allow money to be money again instead of a fiscal or economic tool. We believe more sincerely than ever that such a debate is coming.