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THE
ROCKET SCHOOL OF ECONOMICS


Oh the Tangled Web We Weave...When We Set Out to Deceive
by Professor von Braun

October 29th, 2000

Perhaps it's the fact that Halloween is just around the corner or maybe it's just the smell coming from Wall Street these days, all that burning rubber as stock markets spin their wheels and can't quite decide upon an actual direction. Who knows? Perhaps it's a sign of the coming election with it's untold lies about prosperity, budget surpluses, computers in every home, education for all (that one always gets me, as in what have American schools and universities been doing for the last 200 years?) and a burning desire on the part of some candidates to take care of "you" -- the same "you" who are apparently very prosperous after these 8 years of great prosperity and don't need to be taken care of anyway. Figure that one out! If everybody is so prosperous, why do they need to be taken care of?

Or perhaps it's the continual blows in US $ terms to the gold market that appear as falling prices on a daily basis, along with the slow death of the XAU index. Or maybe it's the demolition derby being played out in the world currency markets as we see some currencies making new lows, yet again that give me the sinking feeling every time I watch either CNBC or CNN. I don't know, but what my instinct is telling me is very, very different from what I see and hear in the popular world of bubble-vision.

Somebody in authority is ignoring all the usual yardsticks of economic determination and has developed an apparent suicidal tendency, which can only at best have a very negative impact on the savings and retirement plans of millions of people. At worst it -- the suicidal tendency -- could throw the world into a major depression, which would see a major shift in how we respect currencies.

With all due respect Mr. Greenspan, but given some of your mind-boggling statements over the past several years, the question has to be asked, "Have you gone mad?" Are you addicted to the same disease as befell young Nick Leeson at Barings Bank, the trader who made a bad bet and then continued to a) hide the error, and b) increase the bet, convinced that he would win eventually, only to bring down the bank itself?

Are your actions contributing to my feeling of uneasiness when it comes to the true state of the much-touted American prosperity? You making such statements as "Central Banks stand ready to lease large quantities of gold should the price rise" and further, in response to a question from Congressmen Paul re the management of the money supply, you said "It is not possible to manage something you can't define." Now pardon my confusion but as I understand it, what that means is that the $100 bill in my pocket may have a value or it may not, but you as the Chairman of The Federal Reserve, who issued this Federal Reserve Note, have no clear definition of the value of my $100 bill, since you can not clearly define what it is. Is this true? Is this what you meant to say? If it is then pray tell, how should I measure what I am worth? How can I arrive at a clear definition of my net worth? If you as Chairman of the Federal Reserve have no idea of how to measure the value of my $100 bill, who does?

Should I ask my two year old son for an accurate definition? Should I explain to my wife that I believe that our retirement plan is sound, except for one little snag, which is perhaps best described as, "The unit of money (whatever that is) we are using as a measurement of our wealth, can not be accurately measured, or defined by the chairman of the authority that's issuing it."

Well I know what her response will be and I do not intend to deal with it. No sir! She can call you and you, or one of your many associates can explain to her what you actually mean when you say you need to find a more stable proxy for what you believe is the underlying money in the economy. Be careful though because "she who must be obeyed" already believes you have a stable proxy and we are the proud owners of it. She is tough to argue with if she thinks you are wrong so be prepared for the worst.

Regardless of your response, I personally am prepared to take your statements at face value and convert my US $100 bills into something that does have a much clearer definition. Having reviewed your statements in public forums, including Congress and the Senate over the years, (I did not know that you enjoyed WC Fields so much)- I have decided against: Mexican Pesos, British pounds, Swiss francs, Japanese yen, Brazilian reals, sharing in the new economy that you have referred to on the odd occasion and my local bank, whom I know has ignored your warnings about risk and lent to all sorts of funny ventures.

No Sir! I am going to take my grand daddy's advice and trade my $100 bills that have, according to your good self, no definable measure of value and buy gold, from a very reputable dealer of course. One who can clearly define at the very least the purity of what I am buying. No disrespect intended, but if you can't clearly define what is money, who, pray tell can? And good luck with the phone call from the wife, she is Romanian by the way and has had experience with funny money before today.

In addition and all joking aside, could you please explain the distinct feeling of uneasiness I experienced during my recent visit to New York City this past week? Some of the people I spoke to (including a couple of investment bankers, the odd economist and a lawyer or two)) where quite convinced of the idea that the un-measurable (your definition per your response to Congressman Paul) unit of currency in this country that is referred to as money may be heading for a major devaluation, due to the fact that you have increased to an unheard of level the supply of these un-definable "ratio's of goods for money". Have they recently heard about your problem of recognizing that money is NOT unimportant, but how you define it is. Why does it need to be defined? I thought it already was. Silly me. Do you mean it's not defined and we, the gullible public, are constructing 401k plans based on a unit that has no clear definition? Tell me this is not true.

Or are you playing some other game in which we, the unsuspecting public, are not other than a disposable pawn? If so, I strongly recommend that you call Al Gore, whom sees a tad naîve when it comes to spending these un-definable units of exchange and explain the story of the birds and the bees to him. You know, the one about reproduction, nature, over abundance and the tricky part, sex, that un-definable activity that gets everybody in trouble. Especially when you appear to be acting in an over zealous fashion and want to inseminate anything that comes your way, with of course the help of your un-definable substance and turn it into something that you can't manage because you can't define it.

Where were you when I needed you? Think of the fun I could have had as a teenager with my un-definable, un-manageable, un-measurable substance.

However having grown older and perhaps a tad wiser I shall adhere to my grandfather's advice and regardless of how loose your fellow central bankers shall get with their store of available yellow metal, I shall be only to happy to exchange my $100 bills for something that is at the very least definable and tangible while I still can.

We suspect that the October effect will spin over into November this year. Anybody that assumes a bottom is in for the various stock markets around the world and that new highs are only weeks away may inadvertently join the growing list of the new poor. That's the not-so-nice thing about paper assets; when they lose value they tend to be very good at it...here today and down 90% tomorrow.


The Prof can be contacted by email at profvonb2@aol.com

Copyright by Professor von Braun. All Rights Reserved. Reprinted at USAGOLD by permission.

Return to the The Gilded Opinion Index Page

The Rocket School of Economics -- The Lecture Series Index

  • 22 May 2009 -- An Often Overlooked Issue!
  • 28 Mar 2009 -- Problematic Banking Systems!
  • 14 Nov 2008 -- What Exactly is an Asset?
  • 23 Aug 2008 -- Through the Looking Glass?
  • 02 Aug 2008 -- Compounding to the Downside!
  • 26 May 2008 -- Back to Basics Again!
  • 31 Mar 2008 -- The Broken Watch -- Part 2.
  • 27 Mar 2008 -- The Broken Watch -- Part 1.
  • 06 Feb 2008 -- The Financial Equivalent of Faulty Towers.
  • 10 Dec 2007 -- Monetary Systems & Productive Assets.
  • 14 Feb 2007 -- Divorced from Reality
  • 06 Sep 2006 -- Gold, Bankers, the Trade Deficit and Unsettled Transactions
  • 19 Jun 2006 -- When is a Reserve Not a Reserve?
  • 31 May 2006 -- The significance of August 15, 1971.
  • 08 Apr 2006 -- Keep Your Eye on the Ball!
  • 30 Mar 2006 -- What came first?
  • 11 Mar 2006 -- An Unanswered Question.
  • 08 Jan 2006 -- Where have all the projects gone!
  • 11 Dec 2005 -- Gorillas, Rising Gold Prices and Depreciating Paper Currencies!
  • 23 Oct 2005 -- Custodial Risk.
  • 16 Sep 2005 -- An Inherent Flaw.
  • 08 Aug 2005 -- Central Banks and 'Reserves'.
  • 31 Jul 2005 -- Central Bankers, Actors and 'We'.
  • 17 Jul 2005 -- Unintended Consequences! -- Part 3.
  • 07 Jul 2005 -- Unintended Consequences! -- Part 2.
  • 25 Jun 2005 -- Unintended Consequences! -- Part 1.
  • 14 Jun 2005 -- The Two Greater Fools Theory.
  • 03 Jun 2005 -- Real Money, Funny Money and YOU -- Part 4.
  • 30 May 2005 -- Real Money, Funny Money and YOU -- Part 3.
  • 26 May 2005 -- Real Money, Funny Money and YOU -- Part 2.
  • 21 May 2005 -- Real Money, Funny Money and YOU -- Part 1.
  • 09 Nov 2002 -- Carrying a Big Stick.
  • 17 Sep 2002 -- Wishful Thinking!
  • 27 Jul 2002 -- Gold Bugs Beware -- part 2.
  • 10 Jun 2002 -- Gold Bugs Beware!
  • 06 Apr 2002 -- Currencies versus Gold.
  • 26 Jan 2002 -- Bear Market Strategies.
  • 01 Jan 2002 -- 2002 -- A Perspective.
  • 20 Oct 2001 -- The Storm Clouds are Gathering.
  • 30 Sep 2001 -- What to Say?
  • 01 Jul 2001 -- ...Said the Fly to the Spider.
  • 14 Jun 2001 -- Upward and Downward!
  • 28 May 2001 -- Volatility Time, Again!
  • 14 May 2001 -- The Coming Bull Market in Gold Stocks?
  • 24 Feb 2001 -- High Hopes, Wishful Thinking & The Absurd
  • 20 Feb 2001 -- Who Put the Holes in the Swiss Cheese?
  • 22 Jan 2001 -- US Dollar Admits Identity Crisis!
  • 16 Jan 2001 -- Dear George W.
  • 24 Nov 2000 -- The Bubble Has Burst
  • 11 Nov 2000 -- The Media, Bull Markets & the Gold Price
  • 02 Nov 2000 -- Gold Stocks
  • 29 Oct 2000 -- Oh The Tangled Web We Weave ...When We Set Out to Deceive
  • 24 Oct 2000 -- A Mystery!
  • 16 Oct 2000 -- A Peso Here ...and a Few Thousand Pesos There
  • 10 Oct 2000 -- The Unfolding
  • 30 Sep 2000 -- What's Wrong with THIS Picture?
  • 25 Sep 2000 -- Buy Gold Now!!
  • 23 Sep 2000 -- The Times, They Are a' Changing
  • 15 Sep 2000 -- Time WILL Tell!
  • 27 Aug 2000 -- SS "Paper Assets" Begins to Take on Water
  • 06 Aug 2000 -- The Indian Summer
  • 26 Jun 2000 -- A Yellow Brick Wall
  • 22 May 2000 -- The King IS Naked
  • 30 Apr 2000 -- Goodbye Yellow Brick Road
  • 18 Apr 2000 -- Beware the Ides of March, April and May
  • 08 Apr 2000 -- Really, Sir Aldot!
  • 25 Mar 2000 -- Where To From Here?
  • 18 Mar 2000 -- The Gnomes of Zurich
  • 12 Mar 2000 -- The "New" Economy??
  • 06 Mar 2000 -- Two Questions
  • 04 Mar 2000 -- Iceberg Dead Ahead!
  • 28 Feb 2000 -- The Wizard of Oz
  • 06 Feb 2000 -- Here We Go Again!!
  • 15 Jan 2000 -- Comments on the Gold Market
  • 29 Dec 1999 -- No Raw Ingredients Required
  • 28 Dec 1999 -- No Way Out
  • 14 Dec 1999 -- Ho, Ho, Ho!
  • 07 Dec 1999 -- Greenspan's Bubble
  • 03 Dec 1999 -- Early Warning Signs


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