Alan Greenspan Blows My Mind

Adam Taggart
By Adam Taggart on Fri, Nov 7, 2014 - 5:59pm

Holy #$U#@!!

Alan Greenspan, central banker extraordinaire, believes gold is money -- and not only that, but that "no fiat currency, including the dollar, can match it":

According to Zero Hedge, these gold-supportive comments were removed from the official transcript of his recent interview with the Council of Foreign Relations.

Part of me is thrilled to have the truth spoken so directly by such a titanic figure of the establishment.

The other part of me is royally pissed. Where was this commentary when he was running the Fed, this man whose policies (and those of his successors) have been more damaging to fair and true price discovery for the precious metals than anything else in all of history?

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16 Comments

macro2682's picture
macro2682
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Posts: 555
Gold

Who controls the largest mining companies? Lots of mines were built based on $1200+ gold prices.  Perhaps some entity is pushing prices down to suffocate these higher cost providers into foreclosing on their mining assets?  Forcing a consolidation...  

The last time a world order / currency system died, the US collected massive stockpiles of gold in order to link it to the US dollar for strength and control over the global financial system.

How would a global entity do the same thing today on a larger scale?  Confiscation from individuals wouldn't work today, but confiscation from corporations might.  

Step 1.) Allow a practice bubble in gold during a low interest rate environment to entice corporations to borrow money to explore and build up mining infrastructure that is reliant upon higher gold prices for solvency.

Step 2.) Artificially crash prices using the futures market to choke out these weaker players.  Forcing foreclosure of assets to the lenders.

Step 3.) Allow gold to revalue back to all time highs, now that the banks own all the production.

 

Stretch?

 

 

 

Thetallestmanonearth's picture
Thetallestmanonearth
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When a snake tells you the

When a snake tells you the thing that you're about to eat is good for you, you need to step back and reconsider.  What's the angle here?

SingleSpeak's picture
SingleSpeak
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OMG what's next?

Is Bernie Madoff going to call for stricter SEC and FINRA enforcement?indecision

SS

pinecarr's picture
pinecarr
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When a snake tells you ...
When a snake tells you the thing that you're about to eat is good for you, you need to step back and reconsider.  What's the angle here?
 
Maybe he/they hope that the current buyers of physical might come to the same conclusion and be scared away?
 
If nothing else, I do agree with the snake part!  (The commentors on ZH have some even more choice words for Greenspan and his recent remarks).

 

 

 

 

macro2682's picture
macro2682
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Talking his book

He's on the private side now.  He's just talking up his book.  Their fund must have just gone long.

Mark_BC's picture
Mark_BC
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Greatest farce in history of academia

Talking the talk now to save his reputation before he dies.

So the Keynesians forever believed that to create wealth you need to force people into financial repression via debt slavery and then twiddle with monetary and fiscal policy to get them to want to consume more stuff. This creates demand for production which provides jobs for the "producers" of said stuff, and everyone wins! Gold has no place in that!

Now apparently that fairy tale is being discovered to be wrong! Imagine that, a bunch of economists who never spent a day in their lives learning about natural sciences, yet somehow believing they have the capacity to develop sound hypotheses and policies to manage the world economy, the most powerful people in the world, now they see the error in their ways! Halleluja!

Now it's time to move back to way we should be managing economies, the way we should have been doing it all along if it weren't for those darned Keynesians corrupting everyone -- we should be using sound money. And Alan Greenspan is going to lead the pack over to the conversion, told'yaso'ing Bernanke et al all the way! Thanks for your wonderful insights Alan! Instead, now the road to prosperity comes from latching onto a totally different fairy tale called "Austrian Economics" which involves letting people just do what they want to do so that true supply and demand forces can determine prices which then allows people to develop industry where it is needed! That is where wealth comes from! Suppliers responding to real demand! And it all comes down to using gold for money. Producers "producing' stuff according to what Adam Smith said centuries ago before anyone understood how production processes happen.

Wealth doesn't come from plants, no no nooooo. Now, economists are telling us that wealth comes from a gold based monetary system. But for the last half century wealth didn't come from gold. Wealth came from debt. Now the laws of the universe have changed once again, like a polar magnetic flip, and we are back to wealth coming from gold. Thanks for the update and putting that straight, economists.

Seriously, I cannot believe that in the history of the world there was a time when the people running society were so totally intellectually incompetent. Maybe a few thousand years ago when everyone believed the world was flat and the center of the universe, maybe then the establishment was more out to lunch. Oh wait, Greenspan still believes he is the center of the universe, doesn't he.

bwh1214's picture
bwh1214
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Theory

I certainly concede that Alan Greenspan may have sold his sole after taking the reigns at the fed and is now attempting to buy it back. He may now be making an attempt to rewrite what will soon be an infamous legacy, but I wanted thoughts on an alternate theory.

Maybe he never lost his belief in sound money, but knew he could get his nation a lot of prosperity essentially for free. Under his direction the US may have gotten value for pieces of paper or computer digits all the while positioning the US to be in a good position when it falls apart. 

When looked at from an individuals perspective is it more likely a man would turn his back on his strongest beliefs mid life only to re-embrace his roots in twilight. Or that he always maintained those beliefs.

I don't necessarily subscribe to this but wanted to get some thoughts. His writing in early life would fit right in on peak prosperity, obviously his latest comments as well, I think it's a possibility he never changed.

 

thanks

 

Mark_BC's picture
Mark_BC
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But bwh1214 what would make

But bwh1214 what would make him think America would be better positioned when it falls apart? Surely he must have known how all paper empires end. The US will fare worse than any other country when this ends.

Arthur Robey's picture
Arthur Robey
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Gold as Fiat.

I really don't get this "gold is money" thing. It is money because we all agree it is money. It is held that it is valuable because it is scarce, but how many atoms in an ounce of gold? It is not scarce at all. You cannot print gold but it can be valued up, which to my way of thinking is making more money.

As an example: If two people were on a desert island with one palm tree and an ounce of gold- how much would the ounce of gold be worth? One coconut? Two?

If the coconut tree produced only one nut not two, then the value of the nut would go up relative to the value of the gold.

The gold is worth the inverse of whatever the coconut tree was producing, I guess. And our civilization can certainly overproduce- for now at least.

And then there is Mitsubishi transmuting calcium into all sorts of elements.

Rector's picture
Rector
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He Never Believed Otherwise

Early in his career he wrote about, and knew the truth about Gold as a currency.  Once he got a job in the system, he had to play the game as it was arranged on the chessboard.  He couldn't crash the FRN system in the middle of his tenure and try to go back to sound money.  Greenspan wasn't hired to "reform" the monetary system of the western world.  He was hired to manage the system as it existed at the time.  If he had spouted off about the true nature of fiat, or acted on his beliefs about Gold, he would have been immediately fired or assassinated.  In a world full of people more interested in their own well-being than anything else, trying to take the long-term, high road, position seems crazy.

Haven't you ever worked in a job where you had to go along to get along?  Even if you knew it was a stupid course of action for the company?  I know there is a principle involved, and at some point, men of honor should speak up, but that's hoping for a lot in this society.  The Leviathan is JUST TOO BIG.  Collapse is the best medicine.

Rector

thc0655's picture
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Maybe

Maybe Greenspan is STILL working for TPTB, and he is preparing us for the coming paradigm shift which They know is coming and want to get in front of.  Rickards says none of Them want a gold standard but They may be forced into one to try to reestablish trust in the system and in our owners (Them). Back in 2010 Robert Zoellick, the World Bank executive, suggested world leaders consider establishing a gold-based world reserve currency (which Rickards thinks is one possibility for the SDR).

http://www.marketwatch.com/story/world-bank-chief-calls-for-new-gold-standard-2010-11-07

Time2help's picture
Time2help
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Maybe, just maybe...

...who cares what Alan Greenspan says?  More hot air...

Are you not entertained?

Wendy S. Delmater's picture
Wendy S. Delmater
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Who said it?

"Deficit Spending Is A Scheme To Confiscate Wealth. Gold Stands In The Way Of This Insidious Process"

 Alan Greenspan to Ayn Rand. Article here: http://www.zerohedge.com/news/2014-11-08/gold-economic-freedom

What really jumps out at me while reading this is that Greenspan was not incompetent; he knew exactly what he was doing.

jrf29's picture
jrf29
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Alan Greenspan's view on gold is even more interesting than that

I think you are absolutely right, Rector.  In 1966 Greenspan wrote an essay, "Gold and Economic Freedom" in which he strongly argued in favor of a gold standard, and went on to argue that it was an essential element of maintaining a free society.  Here are some very revealing quotes:

Alan Greenspan wrote:

"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable . . .

. . . Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale . . .

. . . In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold . . . The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard."

- Alan Greenspan, "Gold and Economic Freedom," 1966.

The interesting part of this story is that sometime after 2003, then-Congressman Ron Paul approached Alan Greenspan with a copy of Gold and Economic Freedom and asked Greenspan if he would autograph it.  While Greenspan was getting ready to do so, Paul asked Greenspan whether there was anything in the article that he would change.  According to Ron Paul, Greenspan looked at him, smiled, and said quietly, "Not a word," and then signed it.  I heard Ron Paul recount this story in a taped interview a few years ago (sorry, can't remember where to find it).

So Alan Greenspan is either the ultimate sellout, or the ultimate pragmatist.  Either way, as you say Rector, "Once he got a job in the system, he had to play the game as it was arranged on the chessboard."

Now I wonder.  About Greenspan's excessive easy money policies during late 90's and the naught years.  Perhaps his overreaction to the recession of 2000 was because of his personal lack of faith in the durability of fiat money systems.

Rector wrote:

He couldn't crash the FRN system in the middle of his tenure and try to go back to sound money.

Or maybe . . . (and this is really going out on a limb of imagination), intentionally flooding the markets with far too much easy money was his own small contribution -- the only thing that he could have done in his position -- which was calculated to help pull back the curtain on the Federal Reserve and its fiat currency.  Maybe that was his act of rebellion.  After all, if he couldn't go back to gold, what was the only thing that Greenspan could ever do to help discredit the fiat system?  Maybe intentionally charging too far in the opposite direction.

Just a whimsical thought . . .

HughK's picture
HughK
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Greenspan's other flaw: poor oversight due to extreme ideology

Aside from the question of whether or not Greenspan secretly remained a hard-money guy even while spiking the punchbowl while at the Fed, there is the question of his attitudes towards regulation of the financial industry.

On that count, he remained openly consistent with his free market ideology and was fairly reliable in opposing regulation of finance.  One example is when he and Larry Summers cooperated to oppose Brooksley Born's attempt to regulate derivatives when she was head of the CFTC.

While ballooning government is certainly one major problem today, another is the extreme free-market ideology that essentially morphs into different types of giveaways for powerful corporations.  For example, economics professor and Senator Phil Gramm talked a big game about free markets, but when he stepped down as Senator in 2002, it was in the shadow of the Enron scandal, which he and his wife had helped to cause by way of the Enron loophole, among other things.  Deregulation in the name of free markets, but which actually benefits specific companies in their bid to grab as much as possible before being exposed as fraudsters.  OK, fraudsters isn't a word...how about hucksters... :)

Greenspan was one of the central figures of the expansion and legitimization of this ideology.

Cheers,

Hugh

Bankers Slave's picture
Bankers Slave
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Posts: 523
I agree

with your sentiment, which also alludes to the fact that Greenspan and all others in so called positions of power, always bend to the will of the powerful elitist entities hidden behind the curtain.

Greenspan was well remunerated, in order to be the face to take the flak, on behalf of the power that will never reveal its self in public. And he accepted that role with aplomb, just like all the others before and after him.

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