- Harry Reid and Nancy Pelosi admit that George Bush was correct
- The Pope admits there is no God
- George Bush admits he dodged the draft
- The Supreme Court admits public opinion rather than precedent and the Constitution determine rulings
- President Obama admits he has no abilities other than reading words in a melodious manner
- Paul Krugman admits he doesn’t understand conomics
- Alan Greenspan admits we don’t need a central bank
Oops! The last one appears to have happened. According to Tyler Durden, Mr. Greenspan may have just made such an admission:
You read that right. After such establishment “luminaries” as World Bank president Robert Zoellick, Warren Buffett’s father Howard, Jim Grant, and, most recently, Kansas Fed presidentThomas Hoenig, all voiced their support for a return to a gold standard, the most recent addition to the motley group of contrite voodoo shamans is none othe than the man who is singlehandedly responsible for America’s addiction to cheap toxic credit, who spawned such destroyers of the middle class as the current Chaircreature, and who currently is the chief advisor in John Paulson’s crusade to gobble up every ounce of deliverable physical in the world: former Fed Chairman - Alan Greenspan!
In an interview with Fox Business, the man who refuses to go away into that good night: “We have at this particular stage a fiat money which is essentially money printed by a government and it’s usually a central bank which is authorized to do so. Some mechanism has got to be in place that restricts the amount of money which is produced, either a gold standard or a currency board, because unless you do that all of history suggest that inflation will take hold with very deleterious effects on economic activity… There are numbers of us, myself included, who strongly believe that we did very well in the 1870 to 1914 period with an international gold standard.” And a further stunner: Greenspan himself wonders if we really need a central bank. Now our only question: why couldn’t the maestro speak as clearly and coherently during his tenure which resulted in our current near-terminal financial state.
And as a reminder, courtesy of Dylan Grice, if and when we do get a return to a gold standard there would be a need to reindex the monetary base to a real time equivalent price of gold, putting the price of the precious metal at about $6,300: “The US owns nearly 263m troy ounces of gold (the world’s biggest holder) while the Fed’s monetary base is $1.7 trillion. So the price of gold at which the US dollars would be fully gold-backed is currently around $6,300.” And here you have people worried about day trading volatility…
Alan Greenspan was a believer in the gold standard, before entering politics. He provided a compelling argument for gold in 1966 which was included in a book by Ayn Rand entitled “Capitalism the Unknown Ideal.” Greenspan’s contribution was entitled “Gold and Economic Freedom” and concluded:
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.
In more recent times Greenspan has also alluded to the benefits of gold.
Now, Alan Greenspan appears to have returned to full Randian mode, professing the benefits of a gold-backed currency and the dangers of central banking.
Mr. Greenspan does not help himself or his legacy with his continued surfacings. His welcome in the spotlight is over. He should move into the shadows and remain there. Yet like an aging actor, his need for the stage does not match the demand from the audience.
His need for the spotlight, either to impart his no longer valued wisdom or to defend his record, serves no purpose. Indeed, it can only do harm. He risks becoming a public nuisance and fodder for late-night comedy shows. His job is done and history, not Mr. Greenspan, will be the ultimate judge of his performance. Personal ex post rationalizations will not alter history’s judgment.
Mr. Greenspan’s revelations hurt rather than help him. His actions at the Fed could not be more contradictory to his prior and current professed principles (assuming anything he says or writes is to be believed). His recent pronouncements merely expose him as a consummate political hypocrite – a man who went to Washington and compromised his principles to become a power player. In that sense, his lust for power was no different from that of the most corrupt politician.
Instead of enhancing Mr. Greenspan’s professional legacy, these recent appearances tarnish it. Further, they reflect on his character.
Mr. Greenspan, for your and our sake, please just go away! You have damaged the country enough. In attempting to rationalize this behavior, all you succeed in doing in destroying your personal reputation.