Is Gold Money? Alan Greenspan Gives SHOCKING Interview at CFR

For some reason, the Council of Foreign Relations, where ex-Fed-Chief Alan Greenspan spoke last week, decided the following discussion should be left out of the official transcript. We can perhaps understand why... as Gillian Tett concludes, "comments like that will be turning you into a rock star amongst the gold bug community."



TETT: Do you think that gold is currently a good investment?
GREENSPAN: Yes... Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can macth it.

Which is missing from the official CFR transcript...

GREENSPAN: ...remember, we had that first tapering discussion, we got a very strong market response. And then we reassured everybody to have no -- remember, tapering is still (audio gap) of an agreement that the central banks have made -- European central banks, I believe -- about allocating their gold sales which occurred when gold prices were falling down (audio gap) has been renewed this year with a statement that gold serves a very important place in monetary reserves.

And the question is, why do central banks put money into an asset which has no rate of return, but cost of storage and insurance and everything else like that, why are they doing that? If you look at the data with a very few exceptions, all of the developed countries have gold reserves. Why?

TETT: I imagine right now, it's because of a question mark hanging over the value of fiat currency, the credibility going forward.

GREENSPAN: Well, that's what I'm getting at. Every time you get some really serious questions, the 50 percent of the gold price determination begins to move.

TETT: Right.

GREENSPAN: And I think it is fascinating and -- I don't know, is Benn Steil in the audience?

TETT: Yes.

GREENSPAN: There he is, OK. Before you read my book, go read Benn's book. The reason is, you'll find it fascinating on exactly this issue, because here you have the ultimate test at the Mount Washington Hotel in 1944 of the real intellectual debate between the -- those who wanted to an international fiat currency which was embodied in John Maynard Keynes' construct of a banker, and he was there in 1944, holding forth with all of his prestige, but couldn't counter the fact that the United States dollar was convertible into gold and that was the major draw. Everyone wanted America's gold. And I think that Benn really described that in extraordinarily useful terms, as far as I can see. Anyway, thank you.

TETT: Right. Well, I'm sure with comments like that, that will be turning you into a rock star amongst the gold bug community.

*  *  *
As a reminder, here is Ben Bernanke putting people straight on Gold...


As we noted at the time,

Ron Paul asks the Bernanke if he thought gold was money. Bernanke almost swallows his tongue, stares blankly for a few seconds and then says, “no.”

Paul then asks why banks hold gold on their balance sheet?  Why not diamonds?  Bernanke says, “tradition, I suppose.” 

So let me get this straight, banks hold billions of dollars of an asset that pays no interest or dividends on their balance sheet for reasons of "tradition".  nothing to do with anything else, just tradition.  uh, yea.  That must be it.

Debt money and energy connection

OPEC, China, Japan etc earn dollars for oil sales and exports. They deposit those dollars in banks around the world, banks that are owners of the central banks in each nation. If they pull their deposits from the US banks, our banks would collapse as insolvent. If Saudi Arabia decided to sell its oil for euros instead of dollars, the dollar and us banks would crash. We start wars with countries that attempt to move off the US dollar. We don't just want their oil, we want control of their central banks too.

Would it be a case of self fulfilling prophesy if Americans in search of a hedge against the dollar depreciation, bought gold and other currencies, outside the accounts of American banks, which caused a liquidity crisis, which caused a collapse of the banks?

http://nicholsongold.com/page/2/

Is this what happened to the Weimar Republic and the US after WW1?

Did the US central banks lend money to counter the decline in Germany and provide Germany with a means to repay its war loans to the private banks? 

What was the debt to GDP ratio of the Weimar Republic as imports were restricted, exports were restricted, and the central bank printed money, and borrowed from the Federal Reserve?

http://globaleconomicanalysis.blogspot.com/2009/01/brink-of-debt-disaster.html