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GATA Presents New Evidence Of The Fed's Gold Price Supression Scheme, Combing Through Oddly Unredacted FOMC Minutes

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GATA's Adrian Douglas has done a tremendous job of combing through dozens of hundred-plus page FOMC transcripts, and has compiled numerous quotes by assorted FOMC-related personnel, including former Chairman Greenspan, which provides yet another piece of evidence, demonstrating the persistence of the Fed's gold price suppression scheme. As Douglas puts it: "My thinking was that if an organization is so inept at covering up that
detailed transcripts were retained, then perhaps it is also inept at
completely redacting sensitive and incriminating information. What I
found is quite astounding and serves as documented evidence by the
Federal Reserve itself that it manipulates the gold market." We present the relevant quotes dug up by Douglas, whom we applaud for his effort, together with his very relevant commentary, which once again exposes the Fed's covert gold price suppression intentions.

In the March 21, 1978, FOMC meeting --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19780321meeting.p...

-- the following exchange took place.

* * *

CHAIRMAN MILLER. The Treasury has severe reservations about it.
Originally, two weeks ago, they were taking the position that they
would not be in favor of it -- that it raised too many problems for
them. Since then I think they have become a little more open-minded
about it. However, I think the first avenue is apt to be the sale of
gold. Sales of gold were under consideration and were deferred partly
because of the French elections, which are now over. So I think it's
likely that the Treasury will start a program of selling gold, which I
personally would favor. There are a lot of advantages in using gold
because at least then we don't end up with debt and the currency risks
that go with it. So I think that's an avenue that should be pursued.
There has been a discussion about the level of gold sales that are
possible -- what the market can absorb and that sort of thing. Henry
can correct me, but I believe the Treasury feels that they could sell
about 300,000 ounces a month.

MR. WALLICH. That would be a very moderate amount -- something like
less than 60 million. And bear in mind that unless they can develop a
means of selling the gold for foreign currency in a way that doesn't
cause holders of dollars to buy that foreign currency in order to buy
the gold, it could be completely counterproductive. Then there isn't
going to be much of a net effect. There is some because, after all, we
are importers of gold, which may reduce the imports of gold and may
make the trade balance look a little better. There is some portfolio
shift when there is gold in portfolios instead of dollars, so I
wouldn't say it's without effect, but there are lots of qualifications
on the possible success.

CHAIRMAN MILLER. The nice thing about this problem is that it's
surrounded by dilemmas! Everything you do has an adverse effect on
something else. Nothing is ideal. I might add that we live in a
situation where the market is very realistic, very factual. That's why
the possibility that gold would be sold caused the gold price to drop
by $5. You don't have to sell gold; you just have to breathe [that you
may] one day.

* * *

The last sentence by Chairman William Miller (Fed chairman in 1978
and 1979) telling the FOMC that the gold market can be manipulated by
propaganda is very significant. This would certainly make Joseph
Goebbels proud. This manipulative deception has been played out time
and time again since then. This is why official gold sales are always
announced in advance and the announcements are repeated many times, as
happened with the International Monetary Fund's gold sales.

At the FOMC meeting of July 9, 1980 --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19800709meeting.p...

-- the following discussion took place.

* * *

MR. BAUGHMAN. Is it considered a political no-no to sell gold in the current environment?

CHAIRMAN VOLCKER. Oh, I don't think so, necessarily. I don't think
it's a political problem in the sense that you may be suggesting. It's
a question of whether it's very useful or desirable at this stage. [If
we sold gold] we'd have to do it alone; I think that's pretty clear. It
isn't anything that's ruled out a-priori, but it's a practical matter
of whether it's a good idea.

MR. BAUGHMAN. Well, it's between selling assets and borrowing money. That seems to me the significant difference.

VICE CHAIRMAN SOLOMON. The psychology, Ernie, is that [selling gold]
seems to be much more effective if it's a component of an overall
package of forceful measures than if it is done by itself. In the
present climate it would look like a major act of weakness. And that
might spur some additional dollar selling unless we did it on an
enormously massive scale, not just the levels that we have before. On
the other hand, if the situation gets to a point where once again we
have to begin thinking carefully of a package, then along with some
monetary policy measures it would be appropriate and add to the
effectiveness -- this is my own personal feeling -- to do some
substantial gold selling. And in that situation I think the Congress
would understand that. We'd have less of a political problem also. So I
think both factors operate.

CHAIRMAN VOLCKER. I should say, in connection with the political
problem, that I don't think there are any great political constraints
so far as the thinking in the Administration is concerned. There are
politicians who would make a noise that would reflect upon the
credibility of the action. If we sell some gold and then immediately
get some congressional opposition, the market would say: "Well, they're
not going to sell very much because there's too much opposition." And,
therefore, it might not be very productive in terms of the impact we'd
want to achieve.

MR. BAUGHMAN. There would be some grassroots opposition to it. I can report that, but I don't have any impression. ...

CHAIRMAN VOLCKER. Perhaps I spoke a little misleadingly because that
kind of opposition, I think, does reflect on the credibility of the
action. It raises questions about whether it could be sustained and
what the [total] amount would be and whether it's really an accepted
technique or not, even though in some sense I think it's not a
political deal for the Administration except in terms of appraising
that reaction. I can't quite see the Congress opposing it in a formal
sense but there would be a lot of noise by these limited groups. We
have to ratify these transactions.

MR. SCHULTZ. So moved.

* * *

What is noteworthy is the comment by Vice Chairman Solomon when he
says selling gold "seems to be much more effective if it's a component
of an overall package of forceful measures than if it is done by
itself. In the present climate it would look like a major act of
weakness. And that might spur some additional dollar selling unless we
did it on an enormously massive scale, not just the levels that we have
before."

This is without a doubt a proposal to undertake gold market
manipulation, and what's more it is proposed to be on an "an enormously
massive scale." This is not a discussion about selling gold based on a
motivation to maximize the profit from such sales. Furthermore, the
vice chairman admits to previous gold market intervention when he
recommends increased selling of gold that is "not just the levels that
we have before."

What is shocking is the apparent cavalier approach to breaking the
law. Volcker says, "I should say, in connection with the political
problem, that I don't think there are any great political constraints
so far as the thinking in the Administration is concerned. There are
politicians who would make a noise that would reflect upon the
credibility of the action. If we sell some gold and then immediately
get some congressional opposition. ..."

Note that the proposal implies that gold sales would occur without the congressional approval required by law.

The "strong dollar policy" was concocted by Treasury Secretary
Robert Rubin in 1995. However, the mechanism by which such a policy
could be implemented in a supposedly free market was never explained.
GATA has long maintained that the policy involved the suppression of
the gold price. In December 1994 the following exchange took place at
the FOMC meeting --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19941220meeting.p...

* * *

CHAIRMAN GREENSPAN. President Jordan.

MR. JORDAN. I think the main part of our problem right now is
inflation psychology. It certainly reflects the lack of a nominal
anchor. It suggests that it would be helpful to have a politically
supported mandate to attain and maintain a stable value of the dollar.
If somehow we could achieve the conditions of a true gold standard --
without gold but the steady purchasing power of money in the minds of
people -- over time it would make some of these short-term things that
we go through a lot easier to deal with."

* * *

Well, how about that? Achieving the conditions of a true gold
standard without gold? Does that sound like a confidence trick? The
last sentence of the FOMC minutes above here has been redacted. It
would be extremely interesting to know the full extent of the
discussion.

In response to a question posed by U.S. Rep. Ron Paul in testimony
before Congress in 2005, Fed Chairman Greenspan confirmed that this
financial wizardry has actually been implemented:

http://www.lewrockwell.com/paul/paul267.html

* * *

MR. GREENSPAN: So that the question is: Would there be any
advantage, at this particular stage, in going back to the gold
standard? And the answer is: I don't think so, because we're acting as
though we were there. Would it have been a question at least open in
1981, as you put it? And the answer is yes. Remember, the gold price
was $800 an ounce. We were dealing with extraordinary imbalances,
interest rates were up sharply, the system looked to be highly unstable
-- and we needed to do something.

Now, we did something. The United States. ... Paul Volcker, as you
may recall, in 1979 came into office and put a very severe clamp on the
expansion of credit, and that led to a long sequence of events here,
which we are benefiting from up to this date. So I think central
banking, I believe, has learned the dangers of fiat money, and I think,
as a consequence of that, we've behaved as though there are, indeed,
real reserves underneath the system.

* * *

The last sentence is exactly what Mr. Jordan was pondering in the
FOMC meeting of December 1994: How to have a gold standard without
using gold. Greenspan says the Fed "behaved as though there are,
indeed, real reserves underneath the system."

I think it is safe to say there is some financial wizardry that is
apparent by implication. One either has real reserves or one doesn't.
To behave as if there are when there are not is a confidence trick
doomed to fail at some stage.

In the FOMC meeting of Dec 22, 1992, the Fed governors reveled in
the fact that accounting errors in gold shipments could improve the
U.S. balance of trade numbers --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19921222meeting.p...

* * *

CHAIRMAN GREENSPAN. Did I hear you correctly when you said that the
gold exports in October appear to have come from the coffers of the
Federal Reserve Bank of New York? Has anyone looked lately?

MR. TRUMAN. Well, I didn't want to tell too many secrets in this temple!

VICE CHAIRMAN CORRIGAN. Obviously, we knew what happened to the gold, but I don't think we knew what it did to exports.

MR. TRUMAN. What happens in the Census data is that the Federal
Reserve Bank of New York is treated as a foreign country. [Laughter]
And when a real foreign country takes some of the gold out of New York
and ships it abroad, it counts first as imports and then as exports.
However, the import side is not picked up in the Census data. So there
you get the export side of it.

MR. LAWARE. Great accounting!

MR. BOEHNE. Great confidence building!

MR. TRUMAN. That's because you haven't been filling out your import documents!

MR. ANGELL. Let me run this by again. You mean a country owns gold
and has it stored in the Federal Reserve Bank of New York and if they
ship it out, that's an export?

MR. TRUMAN. And in the balance of payments accounts it also counts as an import, so it washes out.

CHAIRMAN GREENSPAN. The Federal Reserve Bank's basement is a foreign
country. When they move it out of the basement into the United States,
it's an import. Then, when they ship it out again, it's an export.

MR. ANGELL. That makes sense!

MR. TRUMAN. And sometimes when they sell the gold, it might be sold
into the United States, so it should count as an import. It doesn't
necessarily always show up as an export.

MR. BOEHNE. That really clarifies it!

MR. KELLEY. Does it have to get out of your vault at all in order to be considered an import and an export?

VICE CHAIRMAN CORRIGAN. Well, I'm not even going to try to answer
that. In this particular case I know what happened, so I think. ...

* * *

The most intriguing part of this discussion is the question by
Kelley: "Does it have to get out of your vault at all in order to be
considered an import and an export?"

While there is no explanation of the thinking behind Kelley's
question (it was probably redacted), it is reasonable to extrapolate
the inference that "ledger entries" for gold movements could be made to
the import or export accounts without any gold having been physically
moved.

At the May 18, 1993, FOMC meeting there was much discussion how gold
influences public attitudes toward inflation. There were discussions
about interfering in the gold market to change the public's expectation
of inflation, and such postulated interference was even regarded as
amusing by the FOMC --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19930518meeting.p...

* * *

MR. ANGELL. Here's what I think would happen. I don't think we
should increase interest rates by 300 basis points, but, if we did, I'm
quite certain the price of gold would immediately begin a [sharp],
quick [drop]. It would happen so fast you'd just have to go and watch
it on the screen. If we made a 100-basis-point increase in the Fed
funds rate, the price of gold surely would turn back down unless the
situation is worse than I anticipate. If we made a 50-basis-point
increase in the Fed funds rate, I don't know what would happen to the
price of gold, but I'd sure like to find out! [Laughter]... People can
talk about gold's price being due to what the Chinese are buying;
that's the silliest nonsense that ever was. The price of gold is
largely determined by what people who do not have trust in fiat money
system want to use for an escape out of any currency, and they want to
gain security through owning gold. Now if annual gold production and
consumption amount to 2 percent of the world's stock, a change of 10
percent in the amount produced or consumed is not going to change the
price very much. But attitudes about inflation will change it."

* * *

Later in the same meeting Greenspan pursued this line of thinking:

* * *

ALAN GREENSPAN: I have one other issue I'd like to throw on the
table. I hesitate to do it, but let me tell you some of the issues that
are involved here. If we are dealing with psychology, then the
thermometers one uses to measure it have an effect. I was raising the
question on the side with Governor Mullins of what would happen if the
Treasury sold a little gold in this market. There's an interesting
question here because if the gold price broke in that context, the
thermometer would not be just a measuring tool. It would basically
affect the underlying psychology. Now we don't have the legal right to
sell gold but I'm just frankly curious about what people's views are on
situations of this nature because something unusual is involved in
policy here. We're not just going through the standard policy where the
money supply is expanding, the economy is expanding, and the Fed
tightens. This is a wholly different thing. Anyway, I'm most curious to
get your views in these various respects, so please don't be afraid to
throw things out on the table.

* * *

Greenspan proposed that if the gold price could be significantly
depressed, then the public's inflation expectations could be radically
altered.

In an FOMC meeting in January 1995 Virgil Mattingly, the Fed's general counsel, said the following --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19950201meeting.p...

* * *

MR. MATTINGLY. It's pretty clear that these ESF [Exchange
Stabilization Fund] operations are authorized. I don't think there is a
legal problem in terms of the authority. The statute is very broadly
worded in terms of words like "credit" -- it has covered things like
the gold swaps -- and it confers broad authority. Counsel at the White
House called the Treasury's general counsel today and asked, "Are you
sure?" And the Treasury's general counsel said, "I am sure." Everyone
is satisfied that a legal issue is not involved, if that helps.

* * *

This comment suggests that the U.S. gold stock has been mobilized in
the market. When GATA urged U.S. Sen. Jim Bunning to pursue this matter
with Greenspan, Mattingly responded (http://www.gata.org/node/1181):

"These inquiries focus primarily on a statement attributed to me
that appears on Page 69 of the published transcript of the January
31-February 1, 1995, FOMC meeting to the effect that the Exchange
Stabilization Fund (ESF) has engaged in 'gold swaps.' Given the passage
of time, some six years, I have no clear recollection of exactly what I
said that day but I can confirm that I have no knowledge of any 'gold
swaps' by either the Federal Reserve or the ESF. I believe that my
remarks, which were intended as a general description of the authority
possessed by the secretary of the treasury to utilize the ESF, were
transcribed inaccurately or otherwise became garbled."

That doesn't pass the smell test. Mattingly's comments "were
transcribed inaccurately or otherwise became garbled"? This is the same
organization that lied to Congress for 17 years about the existence of
any transcripts or recordings of the FOMC meetings. So do we believe
him?

Notice the very clever inference -- "I can confirm that I have no
knowledge of any 'gold swaps' by either the Federal Reserve or the
ESF." He doesn't specify what type of "knowledge" he is talking about.
Is it knowledge that any swaps were ever made or is it knowledge of the
details of swap arrangements that were made? In any case Mattingly is
professing not to know; he is not denying that any swaps have occurred.

The following discussion took place at the July 1991 meeting of the FOMC --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19910703meeting.p...

* * *

ALAN GREENSPAN: Why have commodity prices failed to decline as much
as they ordinarily would during recession periods? Now, it also looks
as if commodity prices are not spiking upward in a recovery like they
ordinarily would. So we have a different picture in commodity prices
than I've seen in a recession and, frankly, I'm very puzzled by it. At
the same time that commodity prices do not show the extent of the
recovery, I think it's somewhat strange that gold prices failed to move
down. Given central banks' reduced willingness to own gold, or given
what I see as a reluctance in the foreign central banks and others to
hold as large gold stocks, given countries in southeast Asia who have
changed their attitudes [toward gold], and given the Soviet Union
[sales], I don't understand why gold prices do not come down. It
suggests to me that there may be some what we call 'crazies' out there
who believe that gold is a good [inflation hedge]. And I guess I think
that [inflation concern] is in the long bond.

* * *

Greenspan thus labels as "crazies" those investors who want to
protect their wealth against the promiscuous money creation of his
Federal Reserve. In 1966 Greenspan wrote an essay titled "Gold and
Economic Freedom" in which he recognized the unique properties of gold
as an inflation hedge --

http://www.321gold.com/fed/greenspan/1966.html

"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. If everyone decided, for
example, to convert all his bank deposits to silver or copper or any
other good, and thereafter declined to accept checks as payment for
goods, bank deposits would lose their purchasing power and
government-created bank credit would be worthless as a claim on goods.
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."

And clearly once Greenspan had sold his soul to the devil and become a "statist" himself, he joined the antagonists of gold.

The following is a very enlightening discussion at the July 1995 FOMC meeting --

http://www.federalreserve.gov/monetarypolicy/files/FOMC19950706meeting.p...

* * *

CHAIRMAN GREENSPAN. I think I've got it! [Laughter] You are telling
me that the SDR [Special Drawing Rights] certificate comes out of the
Treasury and we cancel the Treasury obligation and it is wholly an
asset swap so that the debt to the public of the U.S. Treasury goes
down by that amount. Is that what happens? That solves President
Jordan's problem too! [Laughter]

MR. JORDAN. Can I follow up on that? The same thing happened when we
changed the price of an ounce of gold from $35 to $38 and then to
$42.22. The Treasury got a windfall of about $1 billion to $1.2 billion
in both of those so-called devaluations. So an issue on this is: What
was the dollar price of SDRs that we monetized? You say I have an asset
on my balance sheet and I don't know what the value of it is.

CHAIRMAN GREENSPAN. It's about $42.

MR. TRUMAN. It's $42.22; it's equivalent to the official price of gold.

MR. JORDAN. We do this at the official U.S. Treasury price of gold?

CHAIRMAN GREENSPAN. Do you mean that we can lower the debt to the
public by moving the price of gold up to the market price? That could
cut the debt back by a not insignificant amount!

MR. JORDAN. I have been trying not to mention that publicly for fear that someone might want to do it.

CHAIRMAN GREENSPAN. It's probably too late; we just mentioned it.

MR. JORDAN. It will become known five years from now!

MR. LINDSEY. Five years from now it will be read in the transcript for this meeting.

MR. BLINDER. By which time it already will have been done.

* * *

This exchange is extremely significant because it recognizes that
external debt of the United States eventually will have to be balanced
with the amount of gold claimed to be held by the Treasury.
Interestingly enough the Fed doesn't want this information to be known,
as this would essentially devalue the dollar overnight and give instant
hyperinflation. But as Greenspan points out, it would inflate away the
debt.

The five-year delay in releasing information to the public is
clearly viewed by the Fed as a way to disadvantage the public. When the
Fed and Treasury are forced by market conditions to balance the U.S.
government's debt with its gold holdings, the dollar will be massively
devalued and gold will be multiples of its current price. This would
certainly make it advantageous to be one of the "crazies," as Greenspan
affectionately calls gold investors.

I think the true crazies will be shown to be those people who have
drunk the Kool-Aid to believe that a currency can maintain its
purchasing power when the central bank confesses to employing a
confidence trick -- that it is "behaving" as if there were real
reserves underneath its currency system.

What can be concluded from these insights into the deliberations of the FOMC?

-- On several occasions the Fed discussed targeting gold prices with its policies.

-- The Fed admits that propaganda is effective against gold
investors, insofar as just mentioning the possibility of selling gold
can drive down the gold price.

-- The Fed at least contemplated interfering in the gold market, and
on a massive scale. The Fed admits that the U.S. government has sold
gold with the intention of reducing gold's price.

-- The record shows that the Fed opined that the statutes of the
Exchange Stabilization Fund have legitimized "the gold swaps." Despite
claims that this statement has been inaccurately transcribed or
garbled, recent information suggests otherwise. In response to GATA's
request to the Fed last year under the Freedom of Information Act for
access to Fed documents about gold swaps, Fed Governor Kevin M. Warsh
confirmed that the Fed does indeed have gold swap agreements with
foreign banks:

http://www.gata.org/node/7819

-- The Fed does not want it to be known that the external debt of
the United States could be substantially reduced by revaluing official
gold at the market price, lest someone wants to do that. This is an
admission that the official U.S. price of gold of $42.22 per ounce is a
matter of smoke and mirrors. The ability of the Fed and Treasury to
create money is linked to the only liquid collateral they have, gold.
The gold price that is required to make the value of U.S. gold equal to
the dollars issued is multiples of the current price, and is heavily
dependent on how much unencumbered gold the Treasury still holds.

-- The Fed expressed the utility of having the virtues of a gold
standard without using gold itself. Greenspan later confirmed that the
Fed was behaving as if it was on a gold standard, as if there were
"real reserves" underneath the system. This supports GATA's claims that
the gold price has been suppressed by an increase in the supply of
"paper gold" -- gold that investors believe they have bought and own
but is really no more than a certificate saying they own the gold. This
is the case with the London Bullion Market Association's unallocated
gold accounts, unbacked exchange-trade funds, pool accounts, and gold
derivatives.

The demand for real physical gold bullion is surging in the face of
an impending daisy-chain of sovereign debt defaults. This threatens to
expose the confidence trick -- that much more gold has been sold than
exists. I have explained this in a previous essay, "The Tiny Market
that is the World's Biggest":

http://www.gata.org/node/8248

The Federal Reserve can "behave" as if there are real reserves under
the U.S. dollar, but there are none. A study of the heavily redacted
and edited minutes of the Federal Open Market Committee reveal a
penchant for targeting and manipulating gold prices, and deceiving
Congress and the public.

The words of Alan Greenspan from "Gold and Economic Freedom" could not be more relevant:

"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."

Like clowns at a rodeo, there are too many academics creating a
distraction discussing whether we will have deflation or inflation. We
are now in an era of unprecedented deficit spending -- which means that
confiscation of wealth will also be unprecedented. One of the most
prolific money creators of all time has told us what to do to prevent
it: Buy gold. But buy real physical gold, not a gold receivable.

-----

Adrian Douglas is publisher of the Market Force Analysis letter (www.marketforceanalysis.com) and a member of GATA's Board of Directors.

 

 

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Mon, 03/15/2010 - 10:04 | 265734 Shameful
Shameful's picture

Sorry no, pure villain.  nothing but a social climber.  Read up on him and Rand's salons.  He would throw his mother under a bus for a nickel.  A man must be judged by his deeds not words.  Also we all know that he was more or less a front man.  Need to look past the puppet and to the owners of the Fed.

Mon, 03/15/2010 - 10:24 | 265761 Anonymous
Anonymous's picture

NO, He just playing out his fictional counterpart's role in real life.

He is the "Undertaker", AKA Francisco D'Anconia.

Didn't you read the book? Atlas Shrugged

Patton to Rommel "I read YOUR BOOK you bastard!"

Mon, 03/15/2010 - 11:14 | 265805 Shameful
Shameful's picture

Correct me if I'm wrong but didn't Francisco D'Anconia destroy his own company?  Did Greenspan own the dollar, the US economy?  Did he earn it like D'Anconia and his family?  Face the facts Greespan was a looter pure and simple.  He didn't burn down his house for an object lesson, he burned down our houses for profit.

Sun, 03/14/2010 - 22:40 | 265451 wake the roach
wake the roach's picture

Greenspan says the Fed "behaved as though there are, indeed, real reserves underneath the system."

 

Ah sorry Al, there are real reserves underneath the system and its called energy or what we know as oil, gas and coal. I'm assuming of course that we do live in some kind of objective reality but who knows, maybe Greenspan is correct and its all just a dream?

But no, Greenspan is well aware that every dollar is backed primarily by finite oil. And with an economic system that requires exponential credit expansion (exponential energy consumption) in a world of depleting resources, there can be only one possible outcome...

Mon, 03/15/2010 - 02:00 | 265570 faustian bargain
faustian bargain's picture

Right...this whole 'gold reserves' thing is just a ruse. Now I get it.

Mon, 03/15/2010 - 06:01 | 265627 Anonymous
Anonymous's picture

Now i understand!
U.S. paper and ink is backed by a natural resource that is so scarce within the US that it has had to be imported for decades. So you pay the foreigner (who actually gives value to your USD) with USD (backed by the foreigner's ressources).
Foreigner: "I won't accept your paper and ink any longer!"
WTR: "Are you f*cking crazy? It's backed by your oil!"
You are a true genius.
http://tonto.eia.doe.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MTTIMUS1...

Mon, 03/15/2010 - 09:11 | 265675 SWRichmond
SWRichmond's picture

IMO the "oil is money" meme has some merit.  It perfectly explains, for example, why the US positions armies in the middle east: to protect oil, and thus the value of the USD.  Saudi Arabia can be seen as a bank, where oil is leased into the market much like Fort Knox gold.  If it makes sense for the world's largest gold bank to be guarded by the world's largest military, then it also makes sense for the world's largest oil bank to be guarded by...the world's largest military.  While the U.S. doesn't "own" the oil, we certainly maintain "control" of it.  As long as oil is denominated in USD, USD have value.  This also explains the desire to develop a "strategic petroleum reserve" in the U.S.; once large enough, it could be used to control the buying power in oil of USD (convertibility) by either adding or withdrawing supply.

Mon, 03/15/2010 - 09:27 | 265693 Anonymous
Anonymous's picture

No objection, SWR.
But the question arises: Is this the kind of system we want to have? Do you want currency that derives its value from force, war and occupation?
For how long will oil be denominated in USD? You can't force the world to do so forever.

Mon, 03/15/2010 - 10:12 | 265745 SWRichmond
SWRichmond's picture

I don't agree with it, but I believe it exists.  Being libertarian, I believe in unhindered and voluntary exchange.

Sun, 03/14/2010 - 22:57 | 265459 Anonymous
Anonymous's picture

He mentions devaluation in the article, I think it's a distinct possibility.

Here's an Australian newspaper headline from the late 1940's, maybe early '50's.

GOLD SHARES IN LONDON

LONDON, Thursday. - Australian gold mines shared in the boom that swept the Stock Exchange following devaluation.

Sun, 03/14/2010 - 23:07 | 265465 swamp
swamp's picture

What is the name of the foreign country that is the basement of the Federal Reserve? Anyone know?

 

 

From the article:


MR. ANGELL. Let me run this by again. You mean a country owns gold and has it stored in the Federal Reserve Bank of New York and if they ship it out, that's an export?

MR. TRUMAN. And in the balance of payments accounts it also counts as an import, so it washes out.

CHAIRMAN GREENSPAN. The Federal Reserve Bank's basement is a foreign country. When they move it out of the basement into the United States, it's an import. Then, when they ship it out again, it's an export.

MR. ANGELL. That makes sense!

 


Sun, 03/14/2010 - 23:23 | 265479 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Good question.  Let us do this pragmatically.  "Basement of the temple".  That which supports the structure of the temple.  Understanding the temple.  How about, "Mockadentious" or "Arch-Mengeleland".

I would also be fine with the term "HELL", or "Underworld", however obvious.

Sun, 03/14/2010 - 23:41 | 265490 swamp
swamp's picture

lol, Hell is most befitting.

Mon, 03/15/2010 - 01:26 | 265553 tmosley
tmosley's picture

Pandemonium might fit better soon...

Mon, 03/15/2010 - 01:44 | 265561 faustian bargain
faustian bargain's picture

The Underworld.

Sun, 03/14/2010 - 23:18 | 265475 SWRichmond
SWRichmond's picture

merely trade your $US in for a currency that will not suffer this deprecation.

http://www.zerohedge.com/article/will-real-debt-crisis-please-stand

Which currency would that be?

Mon, 03/15/2010 - 04:08 | 265606 nuinut
nuinut's picture

Gold

Sun, 03/14/2010 - 23:55 | 265484 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

A) Peak gold  B) Gold's REAL high is $2500 (the current high is NOMINAL)  C)  Yes, all currentseas to be devalued

So for you to suggest gold will not get to $2000 shows you have done no homework.  It was there in the early '80s.  You fail.

Gold to $2000 an OZ:

http://www.kitco.com/KitcoNewsVideo/kitco_news.htm

Mon, 03/15/2010 - 02:01 | 265571 faustian bargain
faustian bargain's picture

And even more arguably, the worst is yet to come. But good luck with your optimism.

Mon, 03/15/2010 - 02:19 | 265580 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You know what MB?  Fair enough.  Once the recovery begins to set in, it could get halved.  Now here is the thing, what on earth is going to commence the recovery?  The Hollywood Futures Index?  China lifting it's currentsea peg so we can increase exports?  <WHAT EXPORTS?>  A war?  What?  Also, have you studied gold production?  Do you know that miners are recovering less and less YoY and have been for decades?  Will you please equate that when you are watching your double tops, triple tyrannosaurus, and golden triangles?  I will add, I am almost jealous of your infamous "popularity"....almost ;)

Mon, 03/15/2010 - 11:45 | 265846 Hulk
Hulk's picture

Now here is the thing, what on earth is going to commence the recovery?

Infinite unemployment insurance, defaulted mortgages ,unfunded pension guarantees and healthcare for everyone Mr Hendrix,

just you wait and see! This time, for the first time in recorded history, the welfare state will succeed, dammit!

Also Fiat currency will go back to pre 1913 values, time will flow backwards, innies will become outies, and outies innies...

Sun, 03/14/2010 - 23:42 | 265493 wake the roach
wake the roach's picture

Gold is a relic from the past.

 

Amen... If I was a wall steet banker and was looking for that one final asset bubble of last resort to push my losses onto the public, gold would be it...

Then I would take my earnings whilst US dollars still had purchasing power and purchase all the stocks in renawable energy tech and agricultural commodities for pennies on the dollar whilst every fool is buying gold for $5000 an ounce...

Then when the smoke finally clears, a new currency is issued and my investments have made me filthy rich, I would buy all the gold for next to nothing and build a giant gold mansion...

Mon, 03/15/2010 - 01:34 | 265557 tmosley
tmosley's picture

Fool me once, shame on you, fool me twice, shame on me.

You really think that people, once they have been burned by a fiat currency, and has seen many others collapse, and has turned to gold, will turn back to a new fiat currency promoted by the same fraudsters who destroyed all the other ones?

If so, good luck with that.  People are smarter than you think.

Mon, 03/15/2010 - 02:25 | 265585 wake the roach
wake the roach's picture

Gold had its purpose in the pre digital days of paper, pencils and telegrams and no, there is no such thing as fiat currency or a currency that cannot be debauched for that matter, that is of course, unless you believe in rainbow chasing leprechauns...

 

 

Mon, 03/15/2010 - 04:10 | 265609 nuinut
nuinut's picture

If I were a wall st banker looking to inflate a final bubble, it would be carbon credits.

Mon, 03/15/2010 - 01:46 | 265564 faustian bargain
faustian bargain's picture

Who exactly is going to honor those stock certificates? Which system did you say you didn't trust, again?

Mon, 03/15/2010 - 02:13 | 265575 wake the roach
wake the roach's picture

Yes, and your trusting governements to keep golds private ownership legal or to allow you to redeem it for a new currency right? 

We will still have laws and property rights, companys may go bust but they still have knowledge, patents, machine tools etc...

But you hit the nail on the head, ITS ALL ABOUT TRUST...

Mon, 03/15/2010 - 02:27 | 265587 faustian bargain
faustian bargain's picture

When the government makes gold illegal, that will be the beginning of martial law and the rapid devolution of civil society. Nobody's going to give up their gold. (Nobody smart, anyway.) On the other hand, confiscating stock ownership and various investment funds will be relatively easy, just a few clicks of the mouse button and it's done.

Mon, 03/15/2010 - 09:15 | 265680 SWRichmond
SWRichmond's picture

On the other hand, confiscating stock ownership and various investment funds will be relatively easy, just a few clicks of the mouse button and it's done.

Argentina.  Argentina is a fine example of a government robbing its citizens of anything within reach that had forex value.  The solution: get your assets out of reach.

Mon, 03/15/2010 - 12:59 | 265925 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Awesome peeps!  Thanks for that thread...I emailed it around in hope that my friends and families can see it is not only me saying such things...cheers!

Sun, 03/14/2010 - 23:45 | 265496 Anonymous
Anonymous's picture

The key item to look for in the death spiral is the stock market and the anti-dollar currencies. Should a situation occur where the US dollar rises against the Euro, the Aussie and the Canadian dollar and against the stock market, but falls hard against gold, you have a death spiral in place and your only investment choice is going to be wondering which street gang breaks into your house and blows you away, then steals your gold and food.

Mon, 03/15/2010 - 00:52 | 265538 merehuman
merehuman's picture

I got my relic right here. I may have yours as well . ha ha

I am an old relic myself and happy about it.

Now show me yours!

Mon, 03/15/2010 - 01:17 | 265550 wake the roach
wake the roach's picture

And in classic goldbug style, you can offer no arguments worthy of debate...

Oh, and you even forgot to say,

BOOYA SHIZNIZZLE GOTZ ME NINE AND ME GOLD BITCHEZ... DIGGITY...

Mon, 03/15/2010 - 01:37 | 265558 tmosley
tmosley's picture

Why does he need to justify himself, given the substance of the article?  Or did you read it?  

Enjoy your energy stocks in nations experiencing terminal decline.

Sun, 03/14/2010 - 23:18 | 265476 Anonymous
Anonymous's picture

What about the idea of confiscation of gold when it suits "them" ?

Mon, 03/15/2010 - 02:28 | 265588 faustian bargain
faustian bargain's picture

Why on earth would they want to confiscate gold? It's a relic.

Amazon stocks, on the other hand...

Sun, 03/14/2010 - 23:26 | 265481 Oracle of Kypseli
Oracle of Kypseli's picture

Let's just all be careful here.

Unless this goes main stream, nothing happens. Gold may even go down as options expirations are also being manipulated.

We should know by midweek.

Cheers

Sun, 03/14/2010 - 23:38 | 265489 swamp
swamp's picture

GATA may not be USA mainstream, but Bill Murphy is read in China by the Chinese government, and by persons internationally.

Mon, 03/15/2010 - 08:15 | 265649 Anonymous
Anonymous's picture

+1

Thats right !

Mainstream press in Europe and in Asia DOES know about GATAs findings and people are positioning themselves already.

People in the Anglo-Saxon worlds have been dumbed down and believe whatever nonsense is dished on cable tv.

In Asia people have a natural & healthy distrust to government, so they THINK FOR THEMSELVES.

Who will be head on ?

Go GATA !

Sun, 03/14/2010 - 23:40 | 265491 illyia
illyia's picture

This would make fabulous live theatre.

I am not kidding...

 

Sun, 03/14/2010 - 23:46 | 265499 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

One is already in the works (joke), go to Hollywood Futures Index to invest (not a joke)!

Sun, 03/14/2010 - 23:57 | 265510 swamp
swamp's picture

It is a live theatre and we are watching it now!

Sun, 03/14/2010 - 23:44 | 265495 Anonymous
Anonymous's picture

Even if you do buy gold, and price sky rockets YOU STILL LOSE because of capital gains tax!

Mon, 03/15/2010 - 01:49 | 265565 faustian bargain
faustian bargain's picture

errrr, what? Yeah. good one.

Mon, 03/15/2010 - 02:21 | 265582 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

oh...ok.  well, looks like it is time to start giving it away!

Mon, 03/15/2010 - 09:41 | 265708 Anonymous
Anonymous's picture

As long as we are on USD standard, you will have to convert your gold into cash to spend it. If gold went up relative to USD, you will pay tax.

Mon, 03/15/2010 - 13:00 | 265927 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Or in five years I can give up a coin for some sweet property.  Company yeeehaw!!!

Sun, 03/14/2010 - 23:55 | 265508 swamp
swamp's picture

Think all Arabic countries, the African continent, South America, all of Asia including Burma and other small usually forgotten countries, India, Russia and so on. This is just one clip to give an example of thinking prevalent in countries outside USA, Canada, Western Europe:

"In  Thailand there were few banks in the countryside and provinces in the early days and Thai Baht gold jewelry was commonly used as an alternative currency that could be easily kept, used in trade and commerce and easily converted back into any currency at anytime. Thailand gold jewelry "Baht Gold" has always been a convenient / smart way to invest in a gold object of beauty that can wear and display."

Mon, 03/15/2010 - 02:16 | 265578 PaperWillBurn
PaperWillBurn's picture

Gold shops are everywhere in Thailand. Standing on some streets you can see 4 or 5 different shops within view. Baht jewelry and bars are a savings account out here. Gold is THE chosen wealth reserve.

When the $ losses it's stranglehold on gold the world will not suffer as claimed by many of the posters above. Gold will rise and bring great wealth to the BILLIONS in the "developing world" who still cling onto this relic

Mon, 03/15/2010 - 08:17 | 265650 Anonymous
Anonymous's picture

+1

People in Thailand are waking up.

Everytime there is a price dip, the shops are crowded like hell. You see huge wads of paper money (1000 THB notes) being exchanged on the counter for bullion.

Thais are smarter than people realize.

Well done !

Mon, 03/15/2010 - 10:07 | 265736 Anonymous
Anonymous's picture

+1

Thailand = Land of the free

Gold = Money of the free people

Americans are such dumbed down clowns, and we really laugh about your hamster-in-a-wheel attitudes.

You are born slaves and born loosers in this game !

You people will never get it. Its in your DNA.

Mon, 03/15/2010 - 15:35 | 266123 PaperWillBurn
PaperWillBurn's picture

Well.. this American who's DNA was formulated by generations of Europeans who came from atleast 5 different countries now lives in Thailand and definitely "get's it"

Mon, 03/15/2010 - 00:31 | 265522 Al Huxley
Al Huxley's picture

REALSIMPLE - gold price falling === good for me.   If gold != good for me,, then either

- world ok (I have job, feed, family)

OR

- shit really hit fan in big way (I need guns, shoot stuff to feed family)

Really, as insurance, I can't lose.

 

Mon, 03/15/2010 - 09:13 | 265678 Shameful
Shameful's picture

Thank you!  Someone else who gets it.  I don't think a lot of people understand we don't want gold to go up, because it represents the devaluation of the dollar which we get paid in.  I would be pleased as punch for gold to crash down beneath Brown's Bottom aka under $252.80.  While us "goldbugs" see a currency collapse in the works, most of us don't want it because of the chaos it would cause.  The gold is just an insurance policy you keep stashed away if/when your fiat paper of choice fails.

Mon, 03/15/2010 - 09:20 | 265685 SWRichmond
SWRichmond's picture

Like you, I will be more than happy to put my capital back to work when it is safe to do so. 

Mon, 03/15/2010 - 00:33 | 265523 Anonymous
Anonymous's picture

regardless of what one makes of the gold conversations they demolish the idea of an apolitical fed....concern about political fall out of various policies, especially about how congress or the white house would react is a recurring theme in the dialogue....of course i have maintained that the political independence of the fed is another brainwash delusion sold to the american sheople....

the real question is what has happened to the gold....i believe there is much less there than officially acknowledged....

yet more reasons to abolish the fed and conduct an audit of the gold reserves....

fuck the fed...

Mon, 03/15/2010 - 00:37 | 265528 Anonymous
Anonymous's picture

The $ will never lose its power.
How do I know?
Turbo Timmy tells me so!

Mon, 03/15/2010 - 00:44 | 265532 Anonymous
Anonymous's picture

I'm seeing three things from this but chime in if you interpret otherwise (like that needs to be said):

1. Fed contemplated selling gold to make the trade balance look better

2. Fed contemplated selling gold covertly to depress the price and use that as artifical 'proof' to the market that inflation fears were actually subdued.

3. Fed contemplated purchasing/increasing the price of gold to increase the value of the gold. Since the nominal value of the debt would remain unchanged, the Fed could then use the gold to pay off more of the debt with the increased value of said gold.

Out of all three of the scenarios it seemed they were hesitant to implement any of them, but the most likely scenario to me seems to be #3 as a possible cheat to escape the impending debt crisis.

The Fed could buy the gold with money they printed, which would inflate the currency AND increase the nominal value of the gold. It would effectively reduce the real value of their liabilities and increase the value of their assets in one shot. They could also capitalize on the fact that they would frontrun the market with such a trade, buying gold 'cheap'. Once the signal got out, the price would go through the roof and accomplish previously stated objectives.

The end result would be inflation and a depletion of the gold reserves, but it might stave off the outright default/hyperinflation scenario we're headed for.

I'm not saying it's the right thing to do, but is it a possibility they are considering?

Mon, 03/15/2010 - 04:16 | 265610 nuinut
nuinut's picture

Indeed. Especially if they are the outfit running all the 'Buy Your Old Gold Now!' ads for the last couple years.

Mon, 03/15/2010 - 00:46 | 265534 Al Huxley
Al Huxley's picture

The system is gamed, undoubtedly.  Why do you care what the price of gold is?  Either its a currency (in which case it will go up/down as the USD appreciates/depreciates) or it isn't - in which case, buy walmart or jpm or whatever.  Gerald Loeb recommended hording gold back in the 30s, rich people do it, so I say, follow your instinct, and do what you think is right.  But (if you buy gold) don't buy gold for capital gains, buy it as insurance (in case todays financial house of cards burns down) in which case lower prices are the best thing imaginable.

Mon, 03/15/2010 - 01:04 | 265543 time123
time123's picture

Gold should continue to do well, even on the face of a rising dollar.

 

time123

admin http://invetrics.com/?tag=invetrics-calls-the-bottom

Mon, 03/15/2010 - 01:15 | 265548 Anonymous
Anonymous's picture

Mel Watt is trying to get the Audit the Fed resolution killed. He is from Bank of America's district. Surprised?

Let him know what you think.

Mon, 03/15/2010 - 02:22 | 265583 ThreeTrees
ThreeTrees's picture

 Everything you do has an adverse effect on something else. Nothing is ideal.

 

I like this quote, it is a perfectly apt description of economics.  The way it's phrased amuses me as well.  It implies that there are situations with regards to markets where certain actions have no adverse consequences beyond the intended.  Yeah right...

Mon, 03/15/2010 - 03:43 | 265601 Apocalypse Now
Apocalypse Now's picture

I posted this late to GG's recent article, relevant for this excellent article as well.

GLD paper gold:

  • To those that recommend GLD, I would like to ask you why it trades at a discount to the paper gold price while CEF trades at a premium to the gold price - purchase physical and CEF.  GLD has a provision that holders of large positions may receive preferential treatment for physical delivery.  The prospectus also states that they don't have access to all the warehouses for a full inventory audit and that the inventory may include bars that are not considered good for london delivery (perhaps the tungsten issue).  Wall street believes if you are stupid enough to own paper gold, you deserve to have your money taken from you.

Excerpt from recent FOFOA post:

  • It is now only a matter of time before investors get spooked by the fear of sovereign defaults spreading like a disease. The day is not far off where ALL paper gets shunned and real money gets bids that swamp actual supply. Once the thought process turns to "there's no place to hide", the amount of fake capital trying to enter metal and the ridiculously small Gold stock arena will bid these assets to never before dreamed of values. When there is no place to hide "within" the system, capital will move outside the system.

    The problem is very simple indeed. This week alone the U.S. Treasury is borrowing 1 1/2 times the entire annual global production of Gold. And how much have they borrowed the week before that and the week before that...? The math is impossible and the lifeboat far too small to accommodate anyone even 1 second too late! What could "never happen" 2 or 3 years ago has already happened and then some. Now we wait for sovereigns, U.S. states and cities, even the U.S. Treasury to default...........or hyperinflate.

Beware believing the illusion:

The control grid includes the media, banking, education system, cross corporate initiatives (CFR), and the entertainment industry.  These often promote propaganda/specific agendas meant to mold public opinion and make them receptive to change and provide direction from a handful of powerful individuals. Fear and greed, the carrot and the stick are used to motivate human behavior. 

Santa Claus is a good figment of the imagination for children, while grown "adults" are afraid of people living in Aristotles cave in the middle east convinced that they are trying to kill us because they "hate our freedom".  Kissinger stated, "Today Americans would be outraged if U.N. troops entered Los Angeles to restore order; tomorrow they will be grateful. This is especially true if they were told there was an outside threat from beyond, whether real or promulgated, that threatened our very existence. It is then that all peoples of the world will plead with world leaders to deliver them from this evil. The one thing every man fears is the unknown. When presented with this scenario, individual rights will be willingly relinquished for the guarantee of their well being granted to them by their world government."

As honest money leaves the system (going into physical as trust in paper logically falters due to irresponsible monetary and fiscal policies) they will change the system to be based on reduced consumption using the false global warming argument and CO2 tracking/carbon credits which is just another tool to control the masses (requires transaction information on all your activities - of course so that we can "save the world"). 

All the information will be on an implantable microchip, they will continue to plan events (PRS) to justify moving to this system.  National health care fits into this agenda, property rights on your own body.  Likewise, global H1N1, global warming, and a global financial system (IFM calling for one currency and IBS global oversight power grab) are all "global" problems created to justify a centrally controlled solution, operative word control.  Tyranny can take any apparent form of governance regardless of what it is called dictatorship, republic, communism, socailism, fascism as long as power is centralized.

Don't listen to individuals telling you how you should think, feel, or respond but trust your gut (not your fear or greed, ask your head a question and your heart a question).  GG's statement that the market is a distraction of moving numbers resonates, it looks like the biggest money laundering scheme ever created.  What is imagination and what is real?  Those things that require multiple senses to experience are real (physical).  Rothschild recently stated he was in gold bars and secure (military) government bonds, and I think he knows a thing or two about real wealth.

Where we are and why implosion is possible:

Take a look at this shocking chart, it would appear this metric has led GDP:

http://link.businessinsider.com/view/bir.5gb/480303dc

http://dshort.com/charts/bears/four-bears-large.gif

http://dshort.com/charts/guest/gold-fibonacci-100311.gif

The most valuable commodity of all

"This thing all things devours: Birds, beasts, trees, flowers; Gnaws iron, bites steel; Grinds hard stones to meal; Slays king, ruins town, And beats high mountain down,"

The answer is time, I'm sure Warren Buffett would trade it all to be 20 again.  You and your time are more valuable than gold, you can never get one minute of your life back.  The richest man in the graveyard (gold or other asset) can't take it with him.  How is this relevant to the discussion about gold?  Because dear friend, you have traded your labor (time) in exchange for something.  The reason people value gold is because they value their time and personal property, and they want to have a sense of control regardless of irresponsible political policies. 

It is disrespectful to not honor the contributions of laborers by reducing the value of what they agreed to exchange their labor for ($).  That is a violation of the political contract between the government and the people.  This is how a republic falls, through high taxes and inflation - it reduces production because of natural behavioral motivation. 

Research on happiness shows that marginal increases in happiness are small for increasing incomes over $50k ($50k is enough to make most people "happy").  Enjoy your life, protect what you traded your time for, and focus on real things.  On death beds, people rarely talk about their wealth, they talk about their experiences and the people they love.  Carlos Slim, now the world's wealthiest man, stated in some ways wealth is a burden and that the more wealth you have, the more you worry about it losing value and what to invest in. 

Balance is necessary and obsessing over gold or any other inanimate object, and guarding a gold stash with weapons is a waste of time.  Focus on needs including food and shelter.  At the same time, leaving wealth in a form that can be easily stolen legally through legaleze contracts and questionable investments is a recipe for disaster and dishonors your parents or their memory, your siblings, your children, and yourself.  Your time is meaningful, there is nothing more meaningful.

In short, gold is freedom and debt notes are slavery.

Mon, 03/15/2010 - 05:42 | 265623 chumbawamba
chumbawamba's picture

Awesome!

I am Chumbawamba.

Mon, 03/15/2010 - 08:12 | 265646 Al Gorerhythm
Al Gorerhythm's picture

No need to read any further.

Mon, 03/15/2010 - 09:24 | 265690 SWRichmond
SWRichmond's picture

It is disrespectful to not honor the contributions of laborers by reducing the value of what they agreed to exchange their labor for ($).

It makes absolutely no sense to be paid small amounts of dollars for a week's labor, when vast quantities of those same dollars are effortlessly clicked into existence at the whim of one man.

Mon, 03/15/2010 - 06:11 | 265630 Anonymous
Anonymous's picture

The roman empire debased their hard currency by adding base metals to gold and silver.

What's to stop current governments from doing the same.

Nothing.

Additionally, I would suspect a run on gold spray paint.

Put all your money into dupont stock.

Mon, 03/15/2010 - 06:29 | 265634 Ned Zeppelin
Ned Zeppelin's picture

"If we are dealing with psychology, then the thermometers one uses to measure it have an effect. I was raising the question on the side with Governor Mullins of what would happen if the Treasury sold a little gold in this market. There's an interesting question here because if the gold price broke in that context, the thermometer would not be just a measuring tool. "

I had commented some time ago about the Fed's use of various program announcements etc. as probing instruments to determine and measure the reaction. While an obvious point, it is interesting to see Greenspan say it out loud.

Mon, 03/15/2010 - 06:42 | 265635 nathan1234
nathan1234's picture

One of the reasons   - why Gold?

Gold is universal and has had value throughout history. When the dollar and other currencies fail ( no fiat currency has lasted more than 250 years) it is instictive for people to reach to that medium known to man since time immemorial.

You may be able to thrust some currency or equivalent onto your own citizens but not citizens of other countries. That's why Gold is needed. It is an international system for financial exchanges.

Mon, 03/15/2010 - 08:00 | 265644 Al Gorerhythm
Al Gorerhythm's picture

How many pages of the FOI docs sent to GATA were redacted? 300? If Adrian could find corruption in the scraps sent to him, what nefarious and treasonous shit were they up to in the stuff they didn't want exposed?

Anyone who isn't offended by this, or outraged, doesn't understand the origin money, what gives it value and how it maintains its value.

Some who do understand it, have played on the ignorance of the masses to their advantage. 

You've been had.

Mon, 03/15/2010 - 08:39 | 265665 Anonymous
Anonymous's picture

When will Jamie Dimon be willing to talk about JPM's HUGE and illegal short position in SILVER?

WHY is the CFTC doing nothing about this?

The collusion and corruption must end!

Mon, 03/15/2010 - 08:53 | 265670 Anonymous
Anonymous's picture

sorry to disappoint the Armageddonists here, but the $190 bln entry in the FOF accounts was nothing to do with gold, but the ESF increase of SDR holdings for the US Treasury as part of the IMF's increased allocation.

CYNICALREALIST

Mon, 03/15/2010 - 11:11 | 265802 channel_zero
channel_zero's picture

Nothing to see here. 

A bunch of excerpted discussion about working with gold as another kind of lever to manipulate the 'black box.'

I'd like that time reading the article back.

Mon, 03/15/2010 - 11:22 | 265812 jc125d
jc125d's picture

Poke me in the eye:

CHAIRMAN GREENSPAN. The Federal Reserve Bank's basement is a foreign country. When they move it out of the basement into the United States, it's an import. Then, when they ship it out again, it's an export.

"The Fed does not want it to be known that the external debt of the United States could be substantially reduced by revaluing official gold at the market price, lest someone wants to do that."

These guys should be registered as foreign agants. They are not on our side any way you look at it. That we have been kissing their asses for decades makes me sick. Thanks for turning on the lights. Bold rats - they don't even run!

Mon, 03/15/2010 - 15:30 | 266113 Observer
Observer's picture

Central Banks don't like losing power like everyone else. That is why they are maipulating the gold markets and even mixing gold plated tungsten bars with real gold. They will even call real gold bars fake if they can get away with it. It is not so simple to exchange your real gold bars for any fiat currency anymore as the central bankers will use any and all means they can use to stay on top. if it means making it impossible to tell real gold from fake that is what they will do. there is too much attention on gold now for it to be a reliable acceptable store of value. In the long term it will be so as always but in the meantime we will be stuck with a system that does not allow us to use it. Our natural and acquired skills including negotiating skills are the best hedge against the current situation

Thu, 04/15/2010 - 08:37 | 301664 mark456
mark456's picture

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