Gold and Economic Freedom: Did Greenspan Know What He Was Doing?

Gordon_Gekko's picture

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Anonymous's picture

You may want to check out Bix Weir Road to Roota essays on 24h gold or his website. He comes to the conclusion that Greenspan sees himself as John Galt and has purposely given the bankers the rope.

Kreditanstalt's picture

"If men had no means to store value, i.e. to save, neither long-range planning nor exchange would be possible."


That is SO true - TODAY! 

MsCreant's picture

I am not accusing anyone of anything, I fear this post will be heard that way. This is an honest question. Why do I see posters referencing the ethnicity of some folks in the financial world. I saw posted an article stating 48% of billionaires are Jews, for instance. Why should this fact be something I take into consideration in my thinking about what is happening? How does that help me in thinking things through?

I know this question looks like a landmine, but it is not meant to be.

Thanks for your answers, in advance.

Cheeky Bastard's picture

Why do I see posters referencing the ethnicity of some folks in the financial world


Because they are morons


I saw posted an article stating 48% of billionaires are Jews, for instance. Why should this fact be something I take into consideration in my thinking about what is happening?

Consider this as a form of positive discrimination as a form of reparation for past misdeeds, plus the historical structure and rules within the structure of Jewish community.

MsCreant's picture

Cheeky, I dig you as a poster. What you are doing, sweetheart, is shutting conversation down rather than opening it up. I appreciate your heart, your strength, and your intolerance of injustice. But sometimes, I have learned, if you let people share the logics of how they organize their worlds, you will learn some things that are helpful for understanding where they are coming from. They may not be "morons."

I am a bit of a hot head myself.

Thanks for your answer.

spanish inquisition's picture

There is a saying "He who owns the gold makes the rules". It has been religiously adhered to for thousands of years by certain peoples. Isn't it funny that gold becomes a nuisance once you are a Fed chairman and giving advice to the goyim about their money.

Anonymous's picture

What happened on the 18th of March 2009?

This question is especially directed toward Gordon Gekko and ghostfacedinvestah

Anonymous's picture

Sorry guys but what happened on March 18th 2009?

This is especially directed toward Gordon Gekko and ghostfacedinvestah?

Gordon_Gekko's picture

Fed announced monetization of US Govt. debt and MBS's. Direct monetization of government debt is usually the endgame for a fiat currency regime.

Anonymous's picture

Greenspan: "It's like that movie Office Space. The idea was good but, as we found out later, the computer programmer was working in a little shop in a little town in India, and driving lorries at night to feed his kids, and apparently, the program just got a few zeroes wrong. Well, maybe more than a few."

Anonymous's picture


I am no expert, but I have some common sense. I don't think that anything you say here will convince the paper people that gold is the ultimate value.

You are absolutely right though; what they aren't getting is that not only is it scarce and hard to produce in every way, but it is durable (they're still digging gold coins up thousands of years later) and we all still need a medium of exchange.

Paper, really nothing else, can withstand the ravages of time, gov'ts, fires and floods, etc, etc.

And I don't think they get that Greenspan may have sought to bring the current banking system down by acting the way he did, a la D'anconia et al.

Anonymous's picture

often the value of costume (fiat) jewelry is its appearance to be gold. gold is an excellent electrical conductor, commonly used to plate hi-tech electrical connectors. it is impervious to corrosion, it provides a concentrated form of wealth storage, and it looks pretty cool. although I prefer silver. Many times in history survival hinged on the posession of a piece of gold jewelry to be traded.

Anonymous's picture

The devious plan of the last 30 yrs was ol' Easy Al livin the good life as the grand vizor of the great millennial party. A-shmoosin, a-partyin, and grand vizorin in front of congress in a language that drove Barney Frank to chew up his favorite pair of pink undies in utter frustration. Al had-has it made. What else can you say.

Jay's picture

Ron Paul devotes a chapter in his new book, End the Fed, to Alan Greenspan and speaks directly to Gordon Gekko's contention:

Many libetarians had actually advanced the theory that Greenspan was still a true believer and would advance the cause of sound money and freedom when apprpriate. I never thought that a possibility, and as time moved on, I became more firmly convinced that pragmatism, a philsophic position Ayn Rand hated, drove Greenspan. He visited the House Committee on Oversight and Reform on October 24, 2008, and was welcomed as a "distinguished" former Federal Reserve Board chairman.


This was the final word on Greenspan.


Most of his testimony was designed as an attempt to protect his reputation and to explain away his shortcomings as Federal Reserve Board chairman. His testimony was pathetic. He made the point that the computer programs that they were using to anticipate these problems were not well designed. The only reason there was an expansion of debt is there was an excessive demand for our debt; it was not a consequence of Federal Reserve Board policy. And to climax his arguments, he said that he did make a mistake, that indeed we did not have enough regulations on the market. In other words, create the conditions for malinvestment and compensate for them by having more government regulations. As the hearings were coming to a close, I could only conclude: Greenspan is not John Galt.

Gordon_Gekko's picture

Think about it - what else would he - could he - tell them? Could he come out and say that the Fed needs to be dismantled, that it should be replaced by sound money, that his decisions such as an extremely loose monetary policy were wrong and were in fact designed to kill the very fiat money system that he was incharge of? The banksters would not have spared him if they realized that they've been had by none other than someone who they considered a loyal ally, if not an outright slave. Do you remember what happened to Andrew Jackson? Greenspan just gave those idiot politicians what they wanted to hear - a bullshit answer.

MsCreant's picture

Been reading a little more Greenspanage.

Tin Hats on please.

What if the richdude mission, handed off to Greenspan, was to destroy the fed, so that they could consolidate a global central bank? Milk America for everything you can on the way to Armageddon, get everyone pissed at the Fed, get the public primed to dismantle it themselves and agree to the one world thing via Special Drawing Rights, etc.

Tin Hat off.

Whew!  What happened to me?

Gordon_Gekko's picture

Don't worry about tin-hats. I quote Aristotle again:

"It is the mark of an educated mind to be able to entertain a thought without accepting it."

Anonymous's picture

Prechter has theorized that if the world is truly entering a Grand Supercycle wave IV, by its end we may witness the creation of a "global super-Fed" as the engine of credit to feed the final Grand Supercycle Wave V mania. But we're talking 200-300 years before that mania would reach its zenith.

Anonymous's picture

I applaud you for making this point. Having been an Ayn Rand devotee since I was a teenager, and knowing of Greenspans relationthip to her and his support of her philosophy, I wondered early on, 2002-2003, if he wasn't crashing the system on purpose.

What better way to crash a corrupt system than to take control of it and guide it over the cliff yourself?

It just is beyond my ability to comprehend that a man of such strong principles would do a 180 and stand in support of a system that is completely contrary to his world view.

Back when I started asking if he might be gaming the system I was laughed at by virtually everyone. It's nice to see that I am not the only one who thinks this now.

I also had a theory at the time that the banksters, through their ridiculously lax lending standards, were purposely ruining the credit records of millions of Americans by loaning money they knew would never be repaid so they could charge much higher rates in the future. I wonder if that theory will ever grow legs.

Great work!

Anonymous's picture

Rand ... teenager ... yeah, everyone goes through that phase of development. but some eventually grow out of it when they see thru the BS teeny "philosophy"

Anonymous's picture

Road to Roota II – Maestro Greenspan’s Mangum Opus!

Bix Weir discusses the plan by Alan Greenspan and friends to destroy the entire monetary system in a one time Creative Destruction Event. Read this article to understand what that means. If you open your eyes long enough to see past the monetary smoke and mirrors these days you can tell it is happening as we speak. We are down to the end days for the fiat monetary system with the implosion being dragged on since September of 2008 and very soon to come to a climax.

Ned Zeppelin's picture

As a thought experiment, substitute "widgets" for every mention of gold and you'll soon see that gold is not the problem, or the cure - our problems stem from the failure to confine borrowing and lending within certain parameters through intelligent (and strictly enforced) regulation.  And by widgets I mean any asset having a useful value.  Gold may be a strong candidate for the position, but is is far from the only one. And the right widget is the product of circumstance - there is no innate, immutable law that says gold is "it."

I hereby declare myself not to be a gold bug. I think this is what Karl Denniger is saying too, if I understand him. I think it is a worthy argument to have.  BTW, gold bugs are not crazy either, as I see the logic of running the math matrix, and concluding that, under most circumstances, right now, gold is "it" in terms of being a universal asset that can store value, etc. I get that.  But gold is not the only pre-condition to a properly functioning monetary system, it is a useful solution to the problem of how do you impose restraints on the ability to print money.

Gold has no value if it cannot be eaten, used for ammo, or run an internal combustion engine.  Those are assets of a more enduring nature, but don't work quite so well as a form of "money."

Gordon_Gekko's picture

"And the right widget is the product of circumstance - there is no innate, immutable law that says gold is "it.""

You are right, but it is what it is and until such time as a better medium replaces it, that's what we have. It could have been platinum or something else but through whatever quirk of fate that's what humanity chose. I am aligning myself with the facts as they are rather than the other way round, in order to best survive. Karl Denninger actually thinks the fiat money system to be better than Gold, and that is where he is wrong, and history has PROVEN him to be wrong (of course, with the corrupt educational system we have in America, we wouldn't know anything about history now, would we?). Gold's uniquenes arises out of the fact that people have collectively chosen it as money over other things throughout history. You don't need to have an "innate, immutable law" of any sort but just look at the fact as they are and the FACT is Gold's enormous stocks to flow ratio, which no other commodity has. This gives us confidence that Gold is hoarded and will continue to be used as money.

AR's picture

GG /  You stated:  "...human beings do not change until pushed to desperation..."  That, my friend, is absolutely correct.  One cannot pay for debt, with debt, then pay for that debt, by issuing more debt.  Amercians, and many others around the world, have yet to experience real "desperation."  You're direct and blunt -- we appreciate that quality. Good report.

Green Sharts's picture

Yeah, Greenspan wasn't an incompetent for the last 40 years, he was actually implementing a devious plan to wreck the world economy so the gold standard would be brought back.

Thanks for the laugh.

Gordon_Gekko's picture

It isn't as conspiratorial as you think it is. He gave the bankers what they wanted - as has been the custom throughout Fed's history - only too much of it! I am not saying that is precisely what happened, but it definitely is an interesting way to look at things - a thought experiment, if you will. BTW, reading the essay, do you see any shred of incompetence?

RockyRacoon's picture

Gordon, why can't we just agree that he lost his bearings in the halls of power?  As Greenspan said in his testimony before the House Committee on Oversight and Government Reform:  “Those of us who have looked to the self-interest of lending institutions to protect shareholders’ equity, myself included, are in a state of shocked disbelief.”  Why should we not take him at his doddering word?

Gordon_Gekko's picture

Of course that might very well be - we are just speculating here. To quote Aristotle:

"It is the mark of an educated mind to be able to entertain a thought without accepting it."

Anonymous's picture

If enough people believe that gold it more valuable then fiat, then so it will be.

No different than all the other unshakeable beliefs in other global myths, like transubstantiation, resurrection, virgin births, angels and demons, ghosts, Nobel peace prizes for new POTUSES that wage war, breast implants, nips and tucks, combovers, rugs, lap dancers that love you, CDOs, MBSs, ARMs, zirp, CARS, Lord Blankfein's humanity,ad nauseum.

Deniability and Belief, for most, are Supermen to fact, reality and unmitigated demonstrated disasters.

e.g. they're rebuilding N'Orleans, Californicans still build on Earthquake faults, and people keep incumbents in office.


Anonymous's picture

Without reading more than the grabber at the top, the answer is decidedly, NO.

Miles Kendig's picture

I cannot but think that in a world dominated by those that believe that only way to reflate the ponzi is a race to the fx bottom while attempting to manipulate value stores to correspond in order to maintain a world of relativism and rough equivalence forgot that as that process develops more and more folks will look to maintaining some sense of absolute value in that world.  Creating a feedback loop.

I am sure Greenspan understands this quite well.  After all, any economic system in sum total of debt and assets cannot exceed the sum total of the creation & carrying capacity of those encompassed by that system.  A simple fact the greatest carry trade of all time, the monetization and encumbrance of nearly all future economic activity in a so called perpetual 2% inflationary environment fails to appreciate.  A simple bit of structural engineering that the current crop of central bankers and most politicians are attempting to circumvent.

Regardless, the current structure requires the trust & confidence of nearly all for it to work.  However, the mere existence of the ever growing feedback loop that can no longer be discounted or ignored demonstrates that it is the central banker group that is losing the t/c high ground in the quest for stability of their exponential growth curve in their dream of creating and enhancing a relative world of rough equivalence.


ventcap's picture

Older forms of money versus gold:

Pecuniary - cows - were used to transfer money by droving them  to a distant market and selling them.

Salary - salt - as paid to roman legions and used for food preservation - more valuable than gold at certain periods of history.

Gold was not chosen as money. It evolved into its ultimate role by virtue of all its superior properties.

A cow dies, gold doesnt.

Salt disolves in water, gold doesnt.

Copper transforms into malachite under exposure to air (water and carbon dioxide)

Gold  has an SG of 19, (silver 12).  Gold could be transported with 19 times less volume than transporting water.

But in addition to all those properties and others, the relative scarcity and time and effort to find and mine Au and Ag established their relative values to other commodities.

Summary : Gold (and silver) evolved to their monetary roles because of their properties; they were not chosen or prescribed by law. Paper fiat as legal tender flies in the face of 6000 years of monetary evolution and has almost always been fraudulenty manipulated by its issuers.

Anonymous's picture

For anyone who cares: the old lady on whom I used to practice my Polish, a survivor of WWII and a Nazi camp, commented that in times of war and currency collapse, gold or silver were the best currency, because metals are sold strictly by weight.

X grams of 18K gold got you Y kilos of potatoes or whatever. According to Pani Herta, dollars, pounds or whatever had much more limited purchasing power in that time and place.

Anonymous's picture

I think Paulson's fund is pretty much his own funds too. I enjoyed reading about his protege Paulo Pellegrini.

Your definitely right on 'FAT' ignorance. The Madoffs only come out of the woodwork when Joe Public takes a hit. Nobody even checks the books when the markets get lazy.

Hopefully the term 'Masters of the universe' will be consigned to a rotten period of lies and fakes.

arnoldsimage's picture

. . . so stated the Jewish banker, Paul Warburg: "We will have a world government whether you like it or not. The only question is whether that government will be achieved by conquest or consent" (February 17, 1950, as he testified before the US Senate).

Hephasteus's picture

I guess every central banker must come face to face with the absolute truth before they know exactly how to distort it. Gold DOES NOT AND WILL NOT marry to fractional reserve banking. It creates the paradoxes way way too fast. Which is why it evolved the way it did. To purely fiat with very hidden and abstracted ties to gold. It will TRY to evolve futher into the super obfuscated derivitaves swap crap the central banks are shoving onto society. Take that baby and strangle it to death before it grows up.

Anonymous's picture

yeah, Arnold's just jealous, wishes he was a member of the club

Anonymous's picture

funny that your link contained a google ad for 'bloomberg for mayor'.

JR's picture

You are right, Gordon Gekko, a good starting point for a realistic plan for survival is the awakening of America.  A superb analysis.

As for Alan Greenspan, G. Edward Griffin put it well: “Unfortunately, when Greenspan was appointed as Chairman of the Federal Reserve System, he became silent on the issue of gold.  Once he was seated at the control panel which holds the levers of power, he served the statists well as they continued to confiscate the people’s wealth through the hidden tax of inflation.  Even the wisest of men can be corrupted by power and wealth.”

Two of the many results of the Greenspan/Bernanke years are reflected on yesterday’s front business page of the SF Chronicle, one regarding unemployment, “White-collar workers hit hard,” and the other on reverse mortgages (“Study finds abuses in marketing”) that are eating up all the equity in homes of the elderly.

Regarding unemployment, the Chronicle says that "a new analysis shows that nearly half of the 5.4 million Americans who have been out of work longer than six months held white-collar or professional jobs," making up 46 percent of the long-term jobless compared with 30 percent at the point of peak job loss after the 2001 recession.

Says the article, "These are people with college degrees who have done everything right. It’s like no-fault unemployment.”

Your Fed at work…

Gordon_Gekko's picture

This is what "misallocation of resources" means in real terms.

Anonymous's picture

Just an observation, as a complete amateur and non-finance professional.

Is there a possibility of gold EVER returning to pre-fiat levels of valuation ($35/oz)? If so, does that mean that gold is an inverse short? (Unlimited upside, but limited downside)

If there was a way for gold to return to $35, what would it look like? (massive removal of liquidity, unpopularity, etc...)

If that is the case, then isn't gold a proxy not for panic, but for global leverage? When leverage is increasing, gold falls (typically) and when leverage falls, gold rises?

Please provide some educational feedback, as I am really trying to understand this better.

Gordon_Gekko's picture

Is there a possibility of gold EVER returning to pre-fiat levels of valuation ($35/oz)?

That would involve destroying A LOT of dollars that have already been created - not possible IMHO. The oligarchs would get their heads lopped off.

If so, does that mean that gold is an inverse short? (Unlimited upside, but limited downside)

Actually, you should have said "if not so", but I think you get it. That's EXACTLY right. Gold will never Go back below $850 (or even $1000, if you ask me) now. This is one of the quirks of the fiat money system we have right now and intelligent individuals a la John Paulson will profit handsomely from it.

If that is the case, then isn't gold a proxy not for panic, but for global leverage? When leverage is increasing, gold falls (typically) and when leverage falls, gold rises?

Perhaps I am wrong but I don't think leverage has anything to with it. Falling confidence in fiat money is the primary reason for a rising Gold price. Additionally, the reason Gold dropped almost 50% in price from it's 1980 high and stayed there for two decades is that massive paper Gold supplies (via the Gold futures market) were dumped on the market by the Central Banks (including other shenanigans such as miners "hedging" etc, Gold "leasing" via bullion banks etc). So the futures market has primarily been operating as a fractional reserve system for Gold where many more futures contracts are in existence than Gold available for delivery. If tomorrow delivery was demanded on all the futures contacts, the futures market would basically implode. The price of Gold was/is deliberately controlled by the CB's in order to restore faith in the fiat money system - the source of their power. It serves to hide the massive inflation of paper money that they have engaged in - sort of like shooting the messenger. The low price of Gold for the past few decades has been an illusion and a fantastic chance to get it at firesale prices.

AN0NYM0US's picture

Paulson + Greenspan

the most obvious opportunities are often in plain sight - great article GG

Anonymous's picture

gold has value because people collectively agree that it has value. so you are putting your faith into the assumption that this agreement will continue.

Gordon_Gekko's picture

This is the mistake a lot of people including TumblingDice are making. Nobody is forced to agree that Gold has value. We all KNOW for a FACT that Gold has value because - and you don't seem to be aware of this - it takes a significant amount of human effort to mine it, refine it, etc., unlike paper money which can effectively be created at no cost. I'm not putting my "faith" into any "assumption". I know - for a fact - that Gold has value because no human being can conjure unlimited quantities of it out of thin air. Of course, if there were a technology developed tomorrow to create unlimited amounts of Gold at ZERO cost to the producer, Gold would lose all it's value - but I think it highly unlikely.

PS: Of course, money is all about division of labor and living in a society so therefore I pay attention to what other people have thought of as money over the years (and still do) which is why I go with Gold. If you plan on living all your life alone without ever using any goods/services created by any other human then I admit Gold is useless to you.

aldousd's picture

While I don't think you're actually advocating the labor theory of value, it appears as though you are.  A quick way to make the distinction: Pearls aren't valuable because men dive for them, they dive for them because they are perceived to be valuable by other men.  Gold isn't valuable because man expends effort digging it up, but they expend effort digging it up because they see it's utility in the market as a medium of exchange.  The reason they use gold instead of something else is purely historical context.  There may have been physical attributes of gold, along with it's relative scarcity, that historically made it acceptable as a store of value, but the reason behind its original selection and pervasion is now moot.