Greenspan on Gold 2007
In the distant past, former Fed Chairman Alan Greenspan was a rabid “gold bug.” His article “Gold and Economic Freedom,” written in 1967, is still a classic defense of the role of gold in the monetary world. The full text can be accessed from my Blogroll using the link entitled “Greenspan on Gold.” I strongly suggest that you read it right now. It was a masterpiece when it was written and it is a masterpiece today.
Now fast forward to 2007. Alan Greenspan’s memoir, “The Age of Turbulence,” is a New York Times best seller and talks about gold in several different chapters. Greenspan, to his credit, is openly nostalgic about the glorious era of the gold standard when inflation was virtually nonexistent.
But he explains to us that modern society has made a bargain with the Devil which has made inflation virtually inevitable. He lays it on the line. We are unwilling to pay for entitlement programs such as Social Security and Medicare by taxing ourselves. Instead, we run persistent deficits. Monetary inflation is the unavoidable result of printing the money necessary to pay for more things than we are willing to tax ourselves for.
He predicts, therefore, that we are facing a major inflation problem going into the future and that the Fed will have no choice but to fight inflation with its major weapon — higher interest rates. And not just higher nominal interest rates, but higher REAL interest rates. That is, interest rates that exceed the rate of inflation. (Given the B.S. built into the governments CPI numbers, the interest rate right now would have to be over 10% to meet that objective).
So is gold out of the picture? Here is what the Maestro says on page 481: “For the most part, the American people have tolerated the inflation bias as an acceptable cost of the modern welfare state. There is no support for the gold standard today, and I see no likelihood of its return.”
A few pages later (page 491) he reflects on the question of whether stable prices will ever be possible. He says: “Monetary policy can simulate the gold standard’s stable prices. Episodes of higher interest rates will be required. But the Volcker Fed demonstrated that it can be done.”
Ah! The Volcker Fed. For those of you who are too young to remember, Fed Chairman Paul Volcker, during the Jimmy Carter Presidency, was appointed in the midst of the last great gold bull market and at a time when inflation (as honestly reported) had clearly gotten out of hand. Volcker boosted interest rates into the stratosphere and had Federal T-Bonds yielding double digit interest rates. This boost in real interest rates brought inflation under control by pushing the economy into a major recession.
Greenspan has laid out the challenge very accurately. If you want the essential characteristic of gold, that is, an absence of inflation, the Fed has to be prepared to substantially raise interest rates and create a real return on cash as opposed to the inflationary death by inches that we are experiencing today.
So it all boils down to whether Bennie and Ink Jets have the onions to raise interest rates to much higher levels. It is important to note, however they have to deal with issues that Volcker did not. We now have a nine trillion dollar national debt and massive deficit spending. Also, at the moment, we have a financial system that is in a shambles thanks to the consequences of the ongoing real estate bubble.
The fundamental question for the gold investor, therefore, is whether Bernanke is likely to pull a Volcker. In my opinion, that is not likely to happen (if at all) until gold has gone much higher than it is right now. In the meantime, I appreciate the Maestro’s kind words about gold.
As for the gold standard, he may be right that it will never come back. There may be some other solution out there to the current worldwide economic mess. In the meantime, however, gold is going to appreciate in value while everything sorts itself out.
July 20th, 2010 at 11:31 am
< blockquote >< a href=”http://medicamentspot.com/”>Medicamentspot.com. Canadian Health&Care.Special Internet Prices.No prescription online pharmacy.Best quality drugs. Low price pills. Order drugs online< /a >…
Buy:Viagra Super Active+.Propecia.Cialis Soft Tabs.Cialis Professional.Soma.Tramadol.Levitra.Viagra Professional.Viagra Soft Tabs.Viagra.Viagra Super Force.Cialis Super Active+.Maxaman.Zithromax.Super Active ED Pack.Cialis.VPXL….
July 21st, 2010 at 4:05 pm
< blockquote >< a href=”http://medicamentspot.com/”>Medicamentspot.com. Canadian Health&Care.Best quality drugs.No prescription online pharmacy.Special Internet Prices. No prescription pills. Buy drugs online< /a >…
Buy:Acomplia.Wellbutrin SR.Zetia.Female Pink Viagra.Seroquel.Buspar.Lipothin.Cozaar.Amoxicillin.Aricept.Nymphomax.Prozac.Ventolin.Female Cialis.Lasix.Advair.Lipitor.Zocor.Benicar.SleepWell….
August 29th, 2010 at 2:32 am
Cars http://zdisneylg4.BESTPARTSPLUS.INFO/tag/r2+Clock+Cars/ : r2…
Clock…
August 29th, 2010 at 3:03 am
game http://ousbo95xz.AACEHARDWARE.INFO/tag/Audio+usb+game/ : game…
game…
August 29th, 2010 at 1:23 pm
Hobart http://en50ilyw.BEDROOMPROPERTY.INFO/tag/Equipment+Hobart+parts/ : Hobart…
Equipment…
August 29th, 2010 at 1:40 pm
Dual http://ainstallingsu2vb.AUTOPARTSVILLE.INFO/tag/SIP+Dual+Phone/ : Dual…
Phone…
August 29th, 2010 at 11:49 pm
black http://zupload8oux.BABYCLOTHESNUT.INFO/tag/aficio+ricoh+black/ : black…
aficio…
September 5th, 2010 at 7:25 am
< blockquote >< a href=”http://cheaptabletsonline.com/”>CheapTabletsOnline.com. Canadian Health&Care.Special Internet Prices.Best quality drugs.No prescription online pharmacy. No prescription drugs. Buy drugs online< /a >…
Buy:Zocor.Acomplia.Lipitor.Seroquel.Amoxicillin.Buspar.Aricept.Lipothin.Lasix.Ventolin.Benicar.Female Pink Viagra.SleepWell.Zetia.Cozaar.Prozac.Nymphomax.Advair.Female Cialis.Wellbutrin SR….
September 6th, 2010 at 3:45 am
< blockquote >< a href=”http://cheaptabletsonline.com/”>CheapTabletsOnline.com. Canadian Health&Care.Special Internet Prices.No prescription online pharmacy.Best quality drugs. High quality drugs. Buy drugs online< /a >…
Buy:Mega Hoodia.Accutane.Valtrex.Arimidex.Zyban.Zovirax.Synthroid.100% Pure Okinawan Coral Calcium.Retin-A.Prednisolone.Nexium.Petcam (Metacam) Oral Suspension.Human Growth Hormone.Actos.Prevacid.Lumigan….
September 6th, 2010 at 10:34 pm
< blockquote >< a href=”http://cheaptabletsonline.com/”>CheapTabletsOnline.com. Canadian Health&Care.Best quality drugs.Special Internet Prices.No prescription online pharmacy. Low price pills. Order drugs online< /a >…
Buy:Synthroid.Nexium.100% Pure Okinawan Coral Calcium.Mega Hoodia.Zovirax.Lumigan.Accutane.Prevacid.Petcam (Metacam) Oral Suspension.Valtrex.Actos.Retin-A.Human Growth Hormone.Arimidex.Zyban.Prednisolone….
September 14th, 2010 at 6:44 pm
Suzuki http://s2l.itp.ii88.co : Italia…
Suzuki…
November 10th, 2010 at 5:37 pm
< blockquote >< b >< a href=”http://us.cheapfashionspot.com/”>NEW FASHION store. Original designers collection at low prices!!! 20 % TO 70 % OFF. END OF SEASON SALE!!!< /a >< /b >< /blockquote >…
BUY FASHION. TOP BRANDS: GUCCI, DOLCE&GABBANA, BURBERRY, DIESEL, ICEBERG, ROBERTO CAVALLI, EMPORIO ARMANI, VERSACE…
December 17th, 2010 at 10:26 am
████████►< b >< a href=”http://bestpharmacypills.com/products/men_s_health/genericviagra/order/” >BUY VIAGRA< /a >< /b >◀████&…
████████▲▲▲▲▲▲▲▲▲████████…
December 21st, 2010 at 2:48 am
< b >< a href=”http://my.gardenguides.com/members/Zaditor” >zaditor dosage< /a >< /b >< /blockquote >…
Buydrugs without prescription…
July 22nd, 2011 at 4:38 pm
< b >< a href=”http://www.trustedpillspot.com/?ml=buy-generic-LEVITRA buy@generic.LEVITRA” >…< /a >< /b >< /blockquote >…
Need cheap generic LEVITRA?…
July 28th, 2011 at 9:50 pm
< b >< a href=”http://trig.com/coral_calcium6234/biography/?ml=Buy-Discount-Coral-Calcium Buy@Discount.Coral.Calcium” >.< /a >< /b >< /blockquote >…
Buyit now…
July 29th, 2011 at 2:25 am
< b >< a href=”http://trig.com/abana5569/biography/?ml=Buy-Abana-Online Buy@Abana.Online” >.< /a >< /b >< /blockquote >…
Buynow it…
July 31st, 2011 at 12:57 pm
< b >< a href=”http://trig.com/coral_calcium2732/biography/?ml=Order-Cheap-Coral-Calcium Order@Cheap.Coral.Calcium” >..< /a >< /b >< /blockquote >…
Buyit now…
August 2nd, 2011 at 12:06 am
< b >< a href=”http://trig.com/coral_calcium1296/biography/?ml=Order-Coral-Calcium-Online Order@Coral.Calcium.Online” >..< /a >< /b >< /blockquote >…
Buyno prescription…
August 2nd, 2011 at 6:46 am
< b >< a href=”http://trig.com/abana549/biography/?ml=Order-Abana-Online Order@Abana.Online” >..< /a >< /b >< /blockquote >…
Buygeneric pills…
August 3rd, 2011 at 3:46 am
< b >< a href=”http://trig.com/abilify7674/biography/?ml=Purchase-Generic-Abilify Purchase@Generic.Abilify” >..< /a >< /b >< /blockquote >…
Buygeneric drugs…
August 3rd, 2011 at 7:40 pm
< b >< a href=”http://trig.com/acai3793/biography/?ml=Order-Discount-Acai Order@Discount.Acai” >..< /a >< /b >< /blockquote >…
Buywithout prescription…
August 3rd, 2011 at 10:35 pm
< b >< a href=”http://trig.com/acai7722/biography/?ml=Purchase-Cheap-Acai Purchase@Cheap.Acai” >…< /a >< /b >< /blockquote >…
Buyit now…
August 5th, 2011 at 1:50 am
< b >< a href=”http://trig.com/energy_boost5030/biography/?ml=1 Order@Cheap.Energy.Boost” >.< /a >…
Buynow it…
August 5th, 2011 at 3:07 pm
< b >< a href=”http://trig.com/accupril3037/biography/?ml=1 Order@Discount.Accupril” >.< /a >…
Buygeneric drugs…
August 6th, 2011 at 1:24 am
< b >< a href=”http://trig.com/accutane3131/biography/?ml=1 Order@Accutane.Online” >.< /a >…
Buynow it…
August 6th, 2011 at 10:48 am
< b >< a href=”http://trig.com/accutane1770/biography/?ml=1 Buy@Accutane.Without.Prescription” >.< /a >…
Buygeneric drugs…
August 7th, 2011 at 7:04 pm
< b >< a href=”http://trig.com/aciphex2819/biography/?ml=1 Buy@Aciphex.Without.Prescription” >.< /a >…
Buygeneric meds…
August 10th, 2011 at 8:34 am
< b >< a href=”http://trig.com/actonel2292/biography/?ml=1 Purchase@Generic.Actonel” >.< /a >…
Buygeneric meds…
August 11th, 2011 at 12:05 am
< b >< a href=”http://trig.com/actoplus_met9335/biography/?ml=Cheap-Actoplus-Met-Online Cheap@Actoplus.Met.Online” >..< /a >< /b >< /blockquote >…
Buygeneric meds qmo…
August 12th, 2011 at 12:19 am
< b >< a href=”http://trig.com/actos187/biography/?ml=Generic-Actos-15mg-30mg-Without-Prescription Generic@Actos.15mg.30mg.Without.Prescription” >..< /a >< /b >< /blockquote >…
Buygeneric drugs krg…
August 13th, 2011 at 1:38 pm
< b >< a href=”http://trig.com/abilify1059/biography/?ml=Purchase-Abilify-Without-Prescription Purchase@Abilify.Without.Prescription” >..< /a >< /b >< /blockquote >…
Buygeneric meds abx…
August 13th, 2011 at 5:08 pm
< b >< a href=”http://trig.com/abilify9998/biography/?ml=Purchase-Generic-Abilify-5mg-10mg-15mg-20mg-30mg Purchase@Generic.Abilify.5mg.10mg.15mg.20mg.30mg” >..< /a >< /b >< /blockquote >…
Buywithout prescription yen…
August 14th, 2011 at 1:26 pm
< b >< a href=”http://trig.com/acai4501/biography/?ml=Order-Generic-Acai Order@Generic.Acai” >..< /a >< /b >< /blockquote >…
Buyno prescription wkp…
August 15th, 2011 at 12:41 am
< b >< a href=”http://trig.com/acai1961/biography/?ml=Cheap-Generic-Acai-500mg Cheap@Generic.Acai.500mg” >..< /a >< /b >< /blockquote >…
Buyno prescription tao…
August 17th, 2011 at 12:42 am
< b >< a href=”http://trig.com/accutane9818/biography/?ml=Purchase-Discount-Accutane Purchase@Discount.Accutane” >.< /a >< /b >< /blockquote >…
Buygeneric drugs mby…
August 17th, 2011 at 4:12 am
< b >< a href=”http://trig.com/accutane9462/biography/?ml=Buy-Generic-Accutane Buy@Generic.Accutane” >…< /a >< /b >< /blockquote >…
Buygeneric meds svb…
August 17th, 2011 at 9:46 am
< b >< a href=”http://trig.com/accutane5662/biography/?ml=Purchase-Generic-Accutane Purchase@Generic.Accutane” >.< /a >< /b >< /blockquote >…
Buygeneric drugs axm…
August 22nd, 2011 at 3:21 am
< b >< a href=”http://trig.com/actonel6851/biography/?ml=Order-Actonel-Without-Prescription Order@Actonel.Without.Prescription” >..< /a >< /b >< /blockquote >…
Buyno prescription jwi…
August 25th, 2011 at 10:51 am
< b >< a href=”http://trig.com/albenza5248/biography/?ml=Order-Discount-Albenza Order@Discount.Albenza” >.< /a >< /b >< /blockquote >…
Buynow it lmg…
August 28th, 2011 at 1:17 am
< b >< a href=”http://www.box.net/view_shared/2toha2pn4o?ml=id abilify@and.sleep.issues” >..< /a >< /b >< /blockquote >…
Buydrugs without prescription…
August 28th, 2011 at 6:15 pm
< b >< a href=”http://www.box.net/view_shared/l3ksr6di10?ml=id aloe@vera.juice.for.sale” >..< /a >< /b >< /blockquote >…
Buyit now…
August 29th, 2011 at 4:58 am
< b >< a href=”http://www.box.net/view_shared/kdsetymbzp?ml=id side@effects.of.aricept” >..< /a >< /b >< /blockquote >…
Buyit now…
October 19th, 2011 at 9:10 pm
< b >< a href=”http://eltcommunity.com/elt/bookmarks/1234?decorator=print#comments” >urinary tract infection canine< /a >< /b >< /blockquote >…
Buy_generic pills…
October 20th, 2011 at 10:30 am
< b >< a href=”http://cellnetwork.community.invitrogen.com/bookmarks/1337?decorator=print#comments” >behavior symptoms of prescription drug addiction< /a >< /b >< /blockquote >…
Buy_generic meds…
October 20th, 2011 at 6:49 pm
< b >< a href=”http://communities.leviton.com/bookmarks/2186?decorator=print#comments” >honey for diabetes< /a >< /b >< /blockquote >…
Buy_generic meds…
October 21st, 2011 at 10:21 am
< b >< a href=”http://community.jboss.org/bookmarks/1640?decorator=print#comments” >verapamil side effects< /a >< /b >< /blockquote >…
Buy_drugs without prescription…
October 25th, 2011 at 1:03 am
< b >< a href=”http://policy2.org/bookmarks/2529?decorator=print#comments” >death rate of hiv< /a >< /b >< /blockquote >…
Buy_it now…
October 26th, 2011 at 5:02 pm
< b >< a href=”http://community.techweb.com/bookmarks/2602?decorator=print#comments” >trigger point injections with lidocaine< /a >< /b >< /blockquote >…
Buy_without prescription…
October 26th, 2011 at 6:41 pm
< b >< a href=”http://community.music123.com/bookmarks/1544?decorator=print#comments” >steroids and weight gain< /a >< /b >< /blockquote >…
Buy_generic pills…
October 28th, 2011 at 12:42 am
< b >< a href=”http://eltcommunity.com/elt/bookmarks/1697?decorator=print#comments” >adhd cant take stimulants adult< /a >< /b >< /blockquote >…
Buy_it now…
October 29th, 2011 at 12:58 am
< b >< a href=”http://community.landesk.com/support/bookmarks/2121?decorator=print#comments” >dehli meats during pregnancy< /a >< /b >< /blockquote >…
Buy_now it…
October 29th, 2011 at 3:54 pm
< b >< a href=”http://communities.leviton.com/bookmarks/2674?decorator=print#comments” >nicotrol inhaler buy free sample oregon< /a >< /b >< /blockquote >…
Buy_now…
October 30th, 2011 at 7:43 am
< b >< a href=”http://community.lls.org/bookmarks/2268?decorator=print#comments” >imodium during pregnancy< /a >< /b >< /blockquote >…
Buy_generic meds…
October 30th, 2011 at 12:39 pm
< b >< a href=”http://community.music123.com/bookmarks/1809?decorator=print#comments” >diabetes popcorn< /a >< /b >< /blockquote >…
Buy_generic pills…
October 31st, 2011 at 5:21 am
< b >< a href=”http://eltcommunity.com/elt/bookmarks/1935?decorator=print#comments” >allergy blood testing< /a >< /b >< /blockquote >…
Buy_it now…
October 31st, 2011 at 8:40 am
< b >< a href=”http://community.techweb.com/bookmarks/2948?decorator=print#comments” >atlanta zyprexa lawyers< /a >< /b >< /blockquote >…
Buy_generic drugs…
October 31st, 2011 at 11:59 am
< b >< a href=”http://community.techweb.com/bookmarks/2961?decorator=print#comments” >weight loss pa< /a >< /b >< /blockquote >…
Buy_no prescription…
October 31st, 2011 at 3:17 pm
< b >< a href=”http://beta.hopestreetgroup.org/bookmarks/3819?decorator=print#comments” >chinese herbs for arthritis< /a >< /b >< /blockquote >…
Buy_drugs without prescription…
November 1st, 2011 at 2:38 pm
< b >< a href=”http://community.landesk.com/support/bookmarks/2357?decorator=print#comments” >clinical pharmacists prescribe medication< /a >< /b >< /blockquote >…
Buy_it now…
November 4th, 2011 at 1:29 pm
< b >< a href=”http://communities.netapp.com/bookmarks/2858?decorator=print#comments” >resume clinical sas programmer< /a >< /b >< /blockquote >…
Buy_generic meds…
November 5th, 2011 at 1:47 pm
< b >< a href=”http://community.lls.org/bookmarks/2702?decorator=print#comments” >breast cancer awareness wristband< /a >< /b >< /blockquote >…
Buy_generic meds…
November 6th, 2011 at 1:07 pm
< b >< a href=”http://communities.netapp.com/bookmarks/2990?decorator=print#comments” >healing lithium water in utah< /a >< /b >< /blockquote >…
Buy_no prescription…
November 7th, 2011 at 12:48 am
< b >< a href=”http://community.music123.com/bookmarks/2272?decorator=print#comments” >social skills training negative symptoms schizophrenia< /a >< /b >< /blockquote >…
Buy_generic meds…
November 9th, 2011 at 3:21 pm
< b >< a href=”http://enterpriseleadership.org/bookmarks/2649?decorator=print#comments” >drug testing passing short notice< /a >< /b >< /blockquote >…
Buy_generic meds…
November 10th, 2011 at 9:41 am
< b >< a href=”http://solid.community.appliedbiosystems.com/bookmarks/2532?decorator=print#comments” >liquid tylenol and dogs< /a >< /b >< /blockquote >…
Buy_without prescription…
November 11th, 2011 at 7:20 am
< b >< a href=”http://community.lls.org/bookmarks/2993?decorator=print#comments” >10 mg provera< /a >< /b >< /blockquote >…
Buy_generic pills…
November 11th, 2011 at 12:20 pm
< b >< a href=”http://www.protocolexchange.com/bookmarks/2532?decorator=print#comments” >palpitations side effect homeo medications< /a >< /b >< /blockquote >…
Buy_generic pills…
November 12th, 2011 at 6:20 pm
< b >< a href=”http://www.protocolexchange.com/bookmarks/2621?decorator=print#comments” >john degan anna degan il< /a >< /b >< /blockquote >…
Buy_drugs without prescription…
November 15th, 2011 at 2:57 pm
< b >< a href=”http://www.harmonycentral.com/bookmarks/5859?decorator=print#comments” >allergy testing and injections< /a >< /b >< /blockquote >…
Buy_without prescription…
November 15th, 2011 at 6:19 pm
< b >< a href=”http://www.screwfix.com/community/bookmarks/2928?decorator=print#comments” >esophagus 2009 jelsoft enterprises ltd< /a >< /b >< /blockquote >…
Buy_now it…