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Dear George W.
by Professor von Braun

January 16th, 2001

Dear George W,

Congratulations on your victory. We at the Rocket School wish you the very best of luck, lots of it in fact. It has occurred to us that you are indeed a brave man. Taking over the reins of power after eight years of that other character, well, that requires backbone, stamina, a strong stomach and big "cojones".

Next week it becomes official and you get the keys to the big white mansion. You also get to inherit all of the skeletons lurking in the many closets. There will be some unpleasant surprises as you come to grips with the darker side of the Clinton legacy. We are sure that you are aware of this, that you have access to some good people and that you will be capable of dealing with surprises, both good and bad.

However in all fairness, in case you have missed one or two subtle clues since you finally won the election, there are several things we think you need to pay attention to.

That Greenspan character over at the Federal Reserve, now there is a piece of work. He has done more about-turns during his career than we could possibly mention. We would recommend you find out who is giving him his orders fairly quickly actually. There is a possibility that he may, with shareholder support, have pumped too much liquidity into the US financial system, stemming from it seems a desire to look death, in the form of a financial disaster, in the face once too often.

Given well-documented statements made by him over a thirty year period, as opposed to his inherent liquidity problem over the last few years, coupled with his stated comment that he has no clear means to actually define money, let alone an ability to measure the money supply, we consider him to be, at the very least, the source of the biggest problem you have.

This economy thing, well, that too is of concern to us. By all measures of sound economic theory, somebody allowed, or at best aided and abetted, a "bubble" in all US stock markets, but in particular in the Nasdaq to occur; a bubble being best described as a rapid inflation of paper assets that, when it occurs and finally peaks, is followed by a period of economic dislocation. Just ask the Japanese, since they have been trying to fix a Nasdaq style bubble since 1989, so far without success.
Or, if you can find anybody that's old enough to remember, check the details on what happened here in the US in 1929 and note the similarities when it comes to Federal Reserve policy.

This bubble occurred under, as of next week, the previous administration's watch, which means that they helped it happen, encouraged it in fact and they must have been aware of the dangers of what was transpiring. It needs to be remembered that it burst under their watch, not yours. How you convey that to the voting public, well, that will be a challenge.

The nice thing about that other fellow, the Comeback kid as he has been called, is that some traits of his character are easy to read. He does not care who he sacrifices, as long as it is not himself. I mean let's face it, he would have sacrificed Al Gore and nearly did but for you, Florida and that little Cuban kid. You winning may, indirectly, have played straight into his hands, what with Hillary being elected to the Senate and all. Rest assured he will not sit by and retire quietly, this is not a horse that can be retired to pasture, no sir! As the husband of a Senator, rest assured when Hillary needs support from the press, she will know where to go.

It would be prudent to obtain at an early stage a complete report from the Exchange Stabilization Fund (ESF). You need to know what markets they have been involved in, what they have been doing, and you need to remember Lyndon Johnson. A fellow Texan, rumors still exist to this day that advice he received from Treasury officials on the subject of gold was seriously flawed and was a contributing factor to his stepping down. We suspect that the soon-to-be previous administration has been messing with the gold market, keeping the price at an artificially low level, using US gold reserves to do it and with help from some Federal Reserve shareholders, inadvertently creating a derivatives fiasco that will be, or at the very least lead to the Mother of All Derivatives Blow-ups.

We also believe that your Mr. Greenspan has been aware of this potential for some time. One would also consider it prudent to have a complete review of the recent activities of the US Treasury carried out as quickly as possible. They too have had a hand in the activities of the ESF and obtaining records and resultant testimony from these characters should be a prime consideration, one at the top of the list, in terms of the priorities.

This economy thing also needs to be revisited, since your soon to be predecessor has a well-known and well-documented predisposition for telling big whoppers -- far bigger than anything McDonald's can produce, especially when it comes to such things as e-commerce, e-mails, e-motion and economics.

As for the much-touted Federal budget surplus, well we suggest that you subscribe to Barron's, the weekly financial paper, as quickly as possible and look closely at the numbers they publish re the national debt. According to them this debt has over the last two years, continued to increase, not decrease as we have been led to believe. Then there's the issue of lost revenue from capital gains taxes, which simply have disappeared following the 50% decline in the Nasdaq market.

Then there is the infrastructure problem, which is about to descend upon the US with all the fury of a woman's scorn. It's not just the military that's been compromised by a lack of spare parts, it's the oil, gas and electricity markets as well, to name just a few. They are suffering from a severe lack of new "anythings", a complaint aided and abetted by the need to cultivate the green vote, a feature of the "keep the minorities happy" government run by you know whom.

The Internet, the subject of incredible hype over the last few years is limited in its capabilities and there are many things it can't do. Generate electricity is one and although it has produced a lot of hot air, unfortunately this is not natural gas.

One might also keep an eye on a couple of lawsuits involving Alan Greenspan and the Bank for International Settlements (BIS), which have been filed here in the US.

Once again we wish you all the best, this will not be a simple transition as it now appears you are beginning to find out. Remember to check those closets carefully. The effects of excesses in monetary policy will begin to appear soon and you will be challenged.

The Prof can be contacted by email at

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

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The Rocket School of Economics -- The Lecture Series Index

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  • 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.
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  • 10 Dec 2007 -- Monetary Systems & Productive Assets.
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  • 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.
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  • 31 Jul 2005 -- Central Bankers, Actors and 'We'.
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  • 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.
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  • 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
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  • 12 Mar 2000 -- The "New" Economy??
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