LogoHeader
1-800-869-5115
We welcome your inquiry.

USAGOLD Coins
USAGOLD Menu BAR

The Ron Paul/Alan Greenspan
Congressional Exchanges

Transcripts of the historic hearings before the U.S. House of Representatives' Committee on Financial Services during question & answer sessions, 1997-2005


2005

7/20/2005

Mr. PAUL. If, indeed, this is your last appearance before our committee, Mr. Greenspan, I would have to say that, in the future, I'm sure I'll find these hearings a lot less interesting.

But I do have a couple of parting questions for you. Keynes, when he wrote his general theory, made the point that he has tremendous faith in central bank credit creation because it would stimulate productivity.

But along with this, he also recognized that it would push prices and labor costs up. But he saw this as a convenience, not a disadvantage, because he realized that, in the corrective phase of the economic business cycle, that wages had to go down which people wouldn't accept, a nominal decrease in wages, but if they were decreased in real terms, it would serve the economic benefit.

Likewise, I think this same principle can be applied to our debt. To me, this system that we have today is a convenient way to default on our debt to liquidate our debt after the inflationary scheme.

Even you, in the 1960s, described the paper system as a scheme for the confiscation of wealth.

And, in many ways, I think this is exactly what has happened. We have learned to adapt to deficit financing. But in many ways, the total debt is not that bad because it goes down in real terms.

As bad as it is, in real terms, it's not nearly as high.

But, since we went on a total paper standard in 1971, we have increased our money supply essentially 12-fold. Debt in this country, federal debt, has gone up 19-fold but that is in nominal dollars, not in real dollars.

So my question is this: Is it not true that the paper system that we work with today is actually a scheme to default on our debt? And is it not true that, for this reason, that's a good argument for people not eventually, at some day wanting to buy Treasury bills because they will be paid back with cheaper dollars?

And, indeed, in our lifetime, we certainly experienced this in the late 1970s that interest rates had to go up pretty high and that this paper system serves the interests of big government and deficit financing because it's a sneaky way of paying for it.

At the same time, it hurts the people who are retired and put their money in savings.

And aligned with this question, I would like to ask something to dealing exactly with gold, is that: If paper money today it seems to be working rather well but if the paper system doesn't work, when will the time come? What will the signs be that we should reconsider gold?

Even in 1981, when you came before the Gold Commission, people were frightened about what was happening and that's not too many years ago. And you testified that it might not be a bad idea to back our government bonds with gold in order to bring down interest rates.

So what are the conditions that might exist for the central bankers of the world to reconsider gold?

We do know that they haven't given up on gold. They haven't gotten rid of their gold. They're holding it there for some reason.

So what's the purpose of the gold if it isn't with the idea that some day they might need it? They don't hold lead or pork bellies. They hold gold.

So what are the conditions that you might anticipate when the world may reconsider gold?

Mr. GREENSPAN. Well, you say central banks own gold or monetary authorities own gold. The United States is a large gold holder. And you have to ask yourself: Why do we hold gold?

And the answer is essentially, implicitly, the one that you've raised namely that, over the generations, when fiat monies arose and, indeed, created the type of problems which I think you correctly identify of the 1970s, although the implication that it was some scheme or conspiracy gives it a much more conscious focus than actually, as I recall, it was occurring. It was more inadvertence that created the basic problems.

But as I've testified here before to a similar question, central bankers began to realize in the late 1970s how deleterious a factor the inflation was.

And, indeed, since the late '70s, central bankers generally have behaved as though we were on the gold standard.

And, indeed, the extent of liquidity contraction that has occurred as a consequence of the various different efforts on the part of monetary authorities is a clear indication that we recognize that excessive creation of liquidity creates inflation which, in turn, undermines economic growth.

So that the question is: Would there be any advantage, at this particular stage, in going back to the gold standard?

And the answer is: I don't think so, because we're acting as though we were there.

Would it have been a question at least open in 1981, as you put it? And the answer is yes.

Remember, the gold price was $800 an ounce. We were dealing with extraordinary imbalances, interest rates were up sharply, the system looked to be highly unstable and we needed to do something.

Now, we did something. The United States Paul Volcker, as you may recall, in 1979 came into office and put a very severe clamp on the expansion of credit, and that led to a long sequence of events here, which we are benefiting from up to this date.

So I think central banking, I believe, has learned the dangers of fiat money, and I think, as a consequence of that, we've behaved as though there are, indeed, real reserves underneath the system.

(9)

Return to the The Gilded Opinion Index Page

 

USAGOLD sider, what we have to offer

Great prices. Quick delivery. All the time.
Contemporary gold and silver bullion coins
Bullion-related historic gold coins
U.S. $20 gold pieces

Order Desk
1-800-869-5115
Extension #100
6am to 5pm USMT weekdays.

Prefer e-mail to get started?
orderdesk@usagold.com


Reputation Matters!
Few can match our golden credentials

Zero complaints
Unblemished
stars client review record
(All reviews verified by BBB)

bbb
A+ Rating
Click for details
includes client reviews

Gold coins & bullion since 1973
Better Business Bureau accredited since 1991
American Numismatic Association since 1975
Industry Council for Tangible Assets since 1985
Website in continuous operation since 1997
__________________________________________

Recipient of BBB Gold Star Certificate

for zero complaints 2003 to 2015
(Program suspended 2016)
_________________________________________

What separates us from the competition


News & Views
Forecasts, Commentary & Analysis
on the Economy and Precious Metals


––OCTOBER, 2017––

Gold is up this year not just in dollars but in every major currency

Plus, How professional investors radically altered the gold market, and much more.

We invite you to sign-up for our free monthly newsletter with appreciation to our current and prospective clientele.

Immediate access to this month's edition.


Thinking about what to include in your precious metals portfolio?

We can help! We invite you to put our many years experience in the gold business to work for you. Helping you to assemble a portfolio designed for the times and your particular objectives is what we do. And we've been doing it for over 40 years with everyone from the small to the high net worth investor.

ORDER DESK
By e-mail or phone.


Contact information immediately above.
We welcome your inquiry.


video

Current Special Offers
Stuff our clients love


Our specials feature unusual and hard-to-find historic gold coins that trade at bullion-related prices.

These limited offers often sell-out quickly. For more information on our current offer, please call the Order Desk or visit this link at your earliest convenience.

Add a little scarcity and history to your precious metals portfolio.



OPEN ACCESS FILE

WHY GOLD, WHY NOW


For those seeking a deeper understanding of gold's role in the modern investment portfolio

brsov
A sovereign tale of gold's
historic undervaluation

Oil, gold and a hoard of British sovereigns
stashed in an old piano

swans
BlackSwans YellowGold
The standard reference on how gold performs during periods of deflation, chronic disinflation, runaway stagflation and hyperinflation

compass
Gold Chartography 101
The case for gold ownership in ten charts
you will never see on CNBC

decisions

How would you invest money you didn't need for ten years?
"Perhaps we spend too much energy trying to foretell the future, and too little trying
to be resilient whatever happens."

______________________________

mkMichael J. Kosares, the author of these articles, has more than 40 years experience in the gold business. He is the founder and executive director of USAGOLD (both the website and gold brokerage service), the author of three books on the gold market, and the editor of "News & Views, Forecasts, Commentary & Analysis on the Economy and Precious Metals," the firm's client letter. He has written numerous magazine and internet essays and is well-known for his ongoing commentary on the gold market and its economic, political and financial underpinnings.

ABC

"I keep six honest serving men
(They taught me all I knew);
Their names are What and Why and When
And How and Where and Who."

– Rudyard Kipling –

Book Order Form (US)





 

Friday October 20
website support: sitemaster@usagold.com / general mail: admin@usagold.com
Site Map - Risk Disclosure - Privacy Policy - Shipping Policy - Terms of Use
© 1997-2017 USAGOLD All Rights Reserved
Mailing Address - P.O. Box 460009, Denver, CO USA 80246-0009
1-800-869-5115