Monday, September 6, 2010

Alan Greenspan: Hedge Against the Federal Reserve and Buy Gold

The curious Alan Greenspan, who is now 84 years old, appears to have come full circle and returned to the ideas of his earlier years. In 1966, at the age of 40, he wrote a paper calling for the United States to return to a full gold standard and warned of the dangers of not doing so:

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.
He, of course, abandoned this view, at least publicly, as chairman of the Federal Reserve, and became the money printing puppeteer that through the Federal Reserve pumped trillions of dollars into the banking system. These actions ultimately resulted in the collapse of the housing market, a financial crisis and an economic crisis so severe that it must be compared to the Great Depression.

In her autobiography, Audition, Barbara Walters indicates that while 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...
With the power days of Washington D.C. behind him, and now living in the money days, he appears to be returning to a fondness for gold. Since leaving the Federal Reserve, Greenspan has been cashing in by providing consulting services to hedge funds and other such organizations, who pay for one thing and one thing only: advice that will make them money. Where does Greenspan think hedge fund players can make money in these troubled times? Why with gold, of course!

The multi-billion dollar hedge fund run by John Paulson has a huge position in gold. Zero Hedge reprints a portion of a Paulson letter sent to investors. In that letter, Paulson explains who is advising them to buy so much gold :
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.
Bottom line: The hint from Barbara Walters that Greenspan was simply a sell out to gain power when he took his Federal Reserve position, gains new credence. Now that he makes his money by speaking truth, he is dissing the Fed and telling his paymasters to loaded up on gold.


  1. "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."

    They needed Greenspan for that?

  2. Greenspan is a spineless economic whore.

  3. Sometimes you seriously have to wonder if this has been Francisco D'Anconia speaking all along....

    1. Or MAYBE just Mr. Magoo..."Oh, Magoo, you've done it again!"

  4. Of course there is ANOTHER possibility...that he did it all on purpose! If you don't think it's possible read my article "Greenspan's Golden Secret" ( The TRUTH may be a little more interesting than what the world thinks. Bix

  5. this news makes me think bix weir might be right all along.

  6. While at the Federal Reserve, he pushed for maximum money supply, and now that he is out, he is pushing for the opposite, being gold. This points towards him and his accomplices having planned and engineered this whole financial massacre.

  7. I have to go with Bix. Greenspan's a smart guy, he knew what he was doing when he created the credit bubble and subsequent housing boom. He was either doing it for pay and power or to collapse the system to bring back a gold standard . . . I hope the latter

  8. When I was calling Greenspan financial whore who destroys America in late 1990-ties long before high tech bubble burst I was told that as foreigner I do not understand the way US business works.I have never put a penny in stock market.
    When I was screaming to buy gold in the fall of 2001 and put all my savings into it my boss and other people made rude jokes about me.
    When I have said that I will never buy a house in the middle of 2005 they told me that I have no clue how to make money by investing.
    Today all my gold I have bought below $300 have appreciated 4+ times. Very soon it will be worth MUCH MORE in dollar terms. I laugh at idiots that are bankrupt because they bought house at the worst time possible. Recently my former boss just told me he invested in gold and he treats me with great respect. So why I was right and 99.9% people were wrong? Because I am foreigner and have different perspective. I can easily see the official lies propagated in media, I DON"T trust the government and I have educated myself in economic matters. In the end, I have realized quite early, about 15 years ago that hard times are coming and there is no way out except by default.My success is result of my hard work. I will never act on anyone else opinion. Knowledge is power, lack of it leads to disaster.

  9. Like Gollum in LOTR, Greenspan has a role to play ...

  10. Greenspan has repeatedly denied the Fed's culpability in the tech and housing bubbles, placing the blame on lack of regulations. I doubt he had the noble intent of engineering the collapse of the fiat system to return to gold.