This week there was an interesting article in the Economic Policy Journal about former Fed Chairman Alan Greenspan who is now advising his hedge fund clients to bet against the Federal Reserve and invest in gold.
The article includes a quotation from John Paulson, who runs a multi-billion dollar hedge fund, part of which is invested in gold. In a letter to his investors, Mr. Paulson explains who has been advising his firm to purchase so much gold. He writes:
"Lastly, and perhaps most important, from a monetary policy perspective in developing an ability to forecast the timing and future price of gold we believe we have an unparalleled team. Former Federal Reserve Chairman Alan Greenspan has been extremely helpful to us in understanding the relationship between the monetary base, the money supply, inflation and gold prices."
The article includes a quotation from John Paulson, who runs a multi-billion dollar hedge fund, part of which is invested in gold. In a letter to his investors, Mr. Paulson explains who has been advising his firm to purchase so much gold. He writes:
"Lastly, and perhaps most important, from a monetary policy perspective in developing an ability to forecast the timing and future price of gold we believe we have an unparalleled team. Former Federal Reserve Chairman Alan Greenspan has been extremely helpful to us in understanding the relationship between the monetary base, the money supply, inflation and gold prices."
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Alan Greenspan, who is now 84 years old, has now apparently returned to his economic roots of gold. Or has he? In the 1960's he wrote an essay on gold in which he stated:
"The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit." He goes on to say: "The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is, there are now more claims outstanding than real assets." He concludes by saying: "In the absence of a gold standard, there is no way to protect savings from confiscation through inflation."
However during his time as Federal Reserve Chairman, he WAS the banking system that created an unlimited expansion of credit. His monetary policies were directly responsible for the dot com collapse in 2000 and the housing and economic collapse of 2008 and 2009.
According to the Economic Policy Journal, Barbara Walters, in her autobiography, Audition, indicates that during the time period in which she dated Greenspan, she feuded with him over his agreeing to become Federal Reserve chairman. She wrote:
There is plenty of blame to go around in this economic disaster including banks, congress and several presidents. However, the principal architect of the policies that helped engineer this collapse was none other than Alan Greenspan himself. Barbara Walters implies that Greenspan was simply a sell-out to gain power when he took his Federal Reserve position. That may well be true. But there is something else to consider. Perhaps he was trying to set the stage for a global economic collapse. Just like in the book Atlas Shrugged where John Galt said: "I will stop the motor of the world." And then did.
Alan Greenspan never made such a bold statement, but in practice his policies over a span of 18 years helped lay the foundation for stopping the economic motor of the world. It's happening right now. And its going to continue.
In my Goldseek commentary in June of 2008, I commented on Alan Greenspan by saying: "Is he a genius? Is he evil? Or is he an evil genius that will be praised by history as the man who helped reset the global financial system so we could start over? Only time will tell. But getting there will NOT be half the fun."
"The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit." He goes on to say: "The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is, there are now more claims outstanding than real assets." He concludes by saying: "In the absence of a gold standard, there is no way to protect savings from confiscation through inflation."
However during his time as Federal Reserve Chairman, he WAS the banking system that created an unlimited expansion of credit. His monetary policies were directly responsible for the dot com collapse in 2000 and the housing and economic collapse of 2008 and 2009.
According to the Economic Policy Journal, Barbara Walters, in her autobiography, Audition, indicates that during the time period in which she dated Greenspan, she feuded with him over his agreeing to become Federal Reserve chairman. She wrote:
"How Alan Greenspan, a man who believed in the philosophy of little government interference and few rules or regulations, could end up becoming chairman of the greatest regulatory agency in the country is beyond me. It was a big issue when Alan was first appointed..."
Indeed, Alan Greenspan was a member of Ayn Rand's inner circle that was sarcastically known as "the collective". Ayn Rand wrote Atlas Shrugged and many people in 1987 mistakenly thought Alan Greenspan would bring Rands' objective economic principles to bear on the Federal Reserve. It never happened. Greenspan blew economic bubbles bigger than the earth itself. 25 times bigger in fact. Because as it stands, right now, there are an estimated 1.4 quadrillion dollars worth of financial derivatives. Roughly 25 times the global GDP.There is plenty of blame to go around in this economic disaster including banks, congress and several presidents. However, the principal architect of the policies that helped engineer this collapse was none other than Alan Greenspan himself. Barbara Walters implies that Greenspan was simply a sell-out to gain power when he took his Federal Reserve position. That may well be true. But there is something else to consider. Perhaps he was trying to set the stage for a global economic collapse. Just like in the book Atlas Shrugged where John Galt said: "I will stop the motor of the world." And then did.
Alan Greenspan never made such a bold statement, but in practice his policies over a span of 18 years helped lay the foundation for stopping the economic motor of the world. It's happening right now. And its going to continue.
In my Goldseek commentary in June of 2008, I commented on Alan Greenspan by saying: "Is he a genius? Is he evil? Or is he an evil genius that will be praised by history as the man who helped reset the global financial system so we could start over? Only time will tell. But getting there will NOT be half the fun."
