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Thread: Alan Greenspan: Ron Paul Was Right About The Gold Standard

  1. #1

    Alan Greenspan: Ron Paul Was Right About The Gold Standard

    Pretty interesting interview with Greenspan. Worth downloading and reading. http://www.zerohedge.com/news/2017-0...-gold-standard

    Q.Do you think that fiscal policy should be adjusted to aid monetary policy decisions?

    A. I think the reverse is true. Fiscal policy is much more fundamental policy. Monetary policy does not have thesame potency. And if fiscal policy is sound, then monetary policy becomes reasonably easy to implement. The veryworst situation for a central banker is an unstable fiscal system, such as we are experiencing today.

    The central issue is that the degree of government expenditure growth, largely entitlements, is destabilising the financial system. The retirement age of 65 has changed only slightly since President Roosevelt introduced it in 1935, even though longevity has increased substantially since then. So, the first thing we have to do is raise the retirement age. That could cut expenditure appreciably.I also believe that regulatory capital requirements for banks and financial intermediaries need to be much higher than they are currently. Looking back, every crisis of recent generations has been a monetary crisis. The non-financia lpart of the US economy was in good shape before 2008,for example. It was the collapse of the financial system that brought down the non-financial part of the economy. If you build up enough capital in the financial system, the chances of serial, contagious default are much decreased.If we raised capital requirements for commercial banks,for example, from the current average rate of around 11% to 20% or 30% of assets, bankers would argue




    Q.Against a background of ultra-low and negative interest rates, many reserve managers have been large buyers of gold. In your view,what role does gold play as areserve asset?

    A. When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul, who was a very strong advocate of gold. We had some interesting discussions.I told him that US monetary policy tried to follow signals that a gold standard would have created. That is sound monetary policy even with a fiat currency. In that regard,I told him that even if we had gone back to the gold standard, policy would not have changed all that much.
    Last edited by Krugminator2; 02-21-2017 at 10:07 PM.



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  3. #2

  4. #3
    I told him that US monetary policy tried to follow signals that a gold standard would have created. That is sound monetary policy even with a fiat currency. In that regard,I told him that even if we had gone back to the gold standard, policy would not have changed all that much.
    Except that, as Ron Paul always pointed out, US monetary policy enabled US fiscal policy! Greenspan is probably correct that if we had the same fiscal policy, the monetary policy wouldn't have changed much with a gold standard, but he completely misses the point - we wouldn't be able to sustain that fiscal policy if our monetary policy didn't enable it.
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  5. #4
    Quote Originally Posted by CaptUSA View Post
    Except that, as Ron Paul always pointed out, US monetary policy enabled US fiscal policy! Greenspan is probably correct that if we had the same fiscal policy, the monetary policy wouldn't have changed much with a gold standard, but he completely misses the point - we wouldn't be able to sustain that fiscal policy if our monetary policy didn't enable it.
    I don't think we should have either monetary or fiscal "policy" if you know what I mean. We should always have a stable monetary unit. We should always have the smallest government possible.

  6. #5
    Last line in the quote interesting:

    In that regard,I told him that even if we had gone back to the gold standard, policy would not have changed all that much.
    Last edited by Zippyjuan; 02-22-2017 at 05:00 PM.

  7. #6
    Greenspan quote from 1966 (gnarly!):

    "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."

  8. #7
    Deficit spending is limited only by the ability of the government to borrow.

  9. #8
    Quote Originally Posted by CaptUSA View Post
    Except that, as Ron Paul always pointed out, US monetary policy enabled US fiscal policy! Greenspan is probably correct that if we had the same fiscal policy, the monetary policy wouldn't have changed much with a gold standard, but he completely misses the point - we wouldn't be able to sustain that fiscal policy if our monetary policy didn't enable it.

    I didn't post the entire interview. The answer to the previous question was about spending and concluded with Greenspan saying this:

    "We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line."



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  11. #9
    Quote Originally Posted by Krugminator2 View Post
    I didn't post the entire interview. The answer to the previous question was about spending and concluded with Greenspan saying this:

    "We would never have reached this position of extreme indebtedness were we on the gold standard, because the gold standard is a way of ensuring that fiscal policy never gets out of line."
    Oh well then, that completely changes the context. Thanks. Probably should have read more at the link.

    (I woulda led with that)
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

  12. #10
    Quote Originally Posted by Zippyjuan View Post
    Last line in the quote interesting:
    In that regard,I told him that even if we had gone back to the gold standard, policy would not have changed all that much.
    Except the policy to print more money to cover the costs of the rest of the policy wouldn't, happen as it's not possible to print more gold.

  13. #11
    Entertainment - Idaho Democrat State House Representative vies for supreme idiocy award. Cites gold maintaining its value against inflation as argument that it cannot maintain its value against inflation.

    “In 1868 Gold Was $27 An Ounce… Today It Is $1,218… So You Can’t Say Gold Will Protect Us From Inflation”

    Yes, he actually said that. Real life stupidity has no limits.

    "Let it not be said that we did nothing." - Dr. Ron Paul. "Stand up for what you believe in, even if you are standing alone." - Sophie Magdalena Scholl
    "War is the health of the State." - Randolph Bourne "Freedom is the answer. ... Now, what's the question?" - Ernie Hancock.

  14. #12
    Quote Originally Posted by CaptUSA View Post
    Except that, as Ron Paul always pointed out, US monetary policy enabled US fiscal policy! Greenspan is probably correct that if we had the same fiscal policy, the monetary policy wouldn't have changed much with a gold standard, but he completely misses the point - we wouldn't be able to sustain that fiscal policy if our monetary policy didn't enable it.
    People create money by "borrowing" it into existence from banks. Every US dollar in existence represents someones unpaid debt to someone else. Thus, when loans are paid off, currency is "destroyed".

    Monetary Policy - Borrowing money into existence
    Fiscal Policy - Destroying money by paying back the loan via Taxation


    There is no possible way we could have the same Monetary / Fiscal Policy as we do right now if we were on a Gold Standard because although loans are still possible, gold cant be simply destroyed. I think the lack of a gold standard / honest money system is coupled together deeply with fractional reserve lending practices and the very existence of the Federal Reserve, to which, fractional reserve lending pretty much does not apply.
    1776 > 1984

    The FAILURE of the United States Government to operate and maintain an
    Honest Money System , which frees the ordinary man from the clutches of the money manipulators, is the single largest contributing factor to the World's current Economic Crisis.

    The Elimination of Privacy is the Architecture of Genocide

    Belief, Money, and Violence are the three ways all people are controlled

    Quote Originally Posted by Zippyjuan View Post
    Our central bank is not privately owned.

  15. #13
    Quote Originally Posted by DamianTV View Post
    People create money by "borrowing" it into existence from banks. Every US dollar in existence represents someones unpaid debt to someone else. Thus, when loans are paid off, currency is "destroyed".

    Monetary Policy - Borrowing money into existence
    Fiscal Policy - Destroying money by paying back the loan via Taxation


    There is no possible way we could have the same Monetary / Fiscal Policy as we do right now if we were on a Gold Standard because although loans are still possible, gold cant be simply destroyed. I think the lack of a gold standard / honest money system is coupled together deeply with fractional reserve lending practices and the very existence of the Federal Reserve, to which, fractional reserve lending pretty much does not apply.
    How would you replace fractional reserve lending? A fractional reserve banking system means that banks can loan out part of deposits and must keep a fraction in reserve. Would you have a zero reserve banking system- where a bank doesn't have to keep back any of the money deposited and can loan out all of it if they want? Or would you suggest a full reserve bank (100% reserve) where every cent deposited must be kept on hand and no money can be lent out?

  16. #14
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    Quote Originally Posted by Dr.3D View Post
    Except the policy to print more money to cover the costs of the rest of the policy wouldn't, happen as it's not possible to print more gold.


    ...ummm, couldn't they simply declare [by 'fiat'] that one oz. of gold equals, say 35 'dollars' or whatever instead of 20 or whatever?'...[hint: already been there, done that]

    ...i don't know..but it seems to me a monetary system which requires the debauchery of mother earth in order to execute an 'increase in the money supply' seems particularly goddamned, ooga-booga, republican-radio foolish...

  17. #15
    Quote Originally Posted by Zippyjuan View Post
    Deficit spending is limited only by the ability of the government to borrow.
    And the ability of the government to borrow is limited by the (perceived) ability of the government to pay back what it has borrowed (with interest).

    And the (perceived) ability of the government to pay back what it has borrowed (with interest) is limited by the ability to produce commodity-based money (such as gold).

    But no such limitation applies to the production of fiat money (such as "Federal Reserve Notes").

    Therefore, deficit spending is limited by commodity-based money - but NOT by fiat money.

    And that, in a nutshell, is why governemnts love things like FRNs and hate things like the gold standard.

    (And that, in turn, is why we have such an eye-poppingly, mind-bogglingly huge deficit. Such grotesque irresponsibility is only possible with fiat money ...)
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  18. #16
    Quote Originally Posted by H. E. Panqui View Post


    ...ummm, couldn't they simply declare [by 'fiat'] that one oz. of gold equals, say 35 'dollars' or whatever instead of 20 or whatever?'...[hint: already been there, done that]

    ...i don't know..but it seems to me a monetary system which requires the debauchery of mother earth in order to execute an 'increase in the money supply' seems particularly goddamned, ooga-booga, republican-radio foolish...
    Tell that to the folks who had been using gold as money for thousands of years. Now suddenly we think paper is valuable.



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  20. #17
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    Quote Originally Posted by Dr.3D View Post
    Tell that to the folks who had been using gold as money for thousands of years.
    ...humans have been doing all sorts of goddamned fool, barbarous things for thousands of years...'crucifying mankind upon a cross of gold' is only one of them... ...AGAIN, people need to learn/focus on WHO IS IN CONTROL OF ISSUING 'MONEY'...AND HOW IT IS ISSUED...

    ...WHAT we use 'as money' is far far less important...

    ...goldbugs, ludwiggers, etc., forget that 'GOLD' has never been 'money' in america...(gold COINS stamped by authority of government were sometimes used)...

  21. #18
    Quote Originally Posted by H. E. Panqui View Post
    ...humans have been doing all sorts of goddamned fool, barbarous things for thousands of years...'crucifying mankind upon a cross of gold' is only one of them... ...AGAIN, people need to learn/focus on WHO IS IN CONTROL OF ISSUING 'MONEY'...AND HOW IT IS ISSUED...

    ...WHAT we use 'as money' is far far less important...

    ...goldbugs, ludwiggers, etc., forget that 'GOLD' has never been 'money' in america...(gold COINS stamped by authority of government were sometimes used)...
    The people are in fact in control of issuing money. Yes, what people wish to use as money is what they will use.

  22. #19
    Quote Originally Posted by Dr.3D View Post
    Tell that to the folks who had been using gold as money for thousands of years. Now suddenly we think paper is valuable.
    Values change. Aluminum used to be considered more valuable than gold. (Actually we use more electrons for money than paper or metal- "electronic" money is over 90% of what is used today).

  23. #20
    Quote Originally Posted by Zippyjuan View Post
    Values change. Aluminum used to be considered more valuable than gold. (Actually we use more electrons for money than paper or metal- "electronic" money is over 90% of what is used today).
    Well, how di do... like I said... money is in the eye of those who are using it.

    Government can not dictate what money will be.

    Of course, the U.S. Constitution says Silver and Gold are money. If you don't like that, get it changed.

  24. #21
    Quote Originally Posted by Dr.3D View Post
    Well, how di do... like I said... money is in the eye of those who are using it.

    Government can not dictate what money will be.

    Of course, the U.S. Constitution says Silver and Gold are money. If you don't like that, get it changed.
    The Constitution says the only thing STATES can use is silver and gold. It allows Congress to determine what is money and its value. Congress has "the power to coin (create) money and "regulate the value thereof".

    States:

    No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts
    Last edited by Zippyjuan; 03-24-2017 at 10:39 AM.

  25. #22
    Quote Originally Posted by Zippyjuan View Post
    The Constitution says the only thing STATES can use is silver and gold. It allows Congress to determine what is money and its value. Congress has "the power to coin (create) money and "regulate the value thereof".

    States:
    Thank you, for repeating what I said.

  26. #23
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    Quote Originally Posted by Dr.3D View Post
    The people are in fact in control of issuing money. Yes, what people wish to use as money is what they will use.


    ...here, let a monetary realist [correct] that for you: [some secret-squirrel private banksters] are in fact in control of issuing money. Yes, what [we are forced to use to 'pay' taxe$, fine$, fee$, court order$, etc. ad nau$eam,] is what they will use.

    ...check out steve zarlenga...he blew this old ludwiggers mind..he has acquired much knowledge about the nature of 'money,' monetary history, etc. that ludwiggers do not possess...

  27. #24
    Quote Originally Posted by Zippyjuan View Post
    The Constitution says the only thing STATES can use is silver and gold. It allows Congress to determine what is money and its value. Congress has "the power to coin (create) money and "regulate the value thereof".
    States:
    So you're saying states are forbidden to use any federal money other than gold or silver.
    "Let it not be said that we did nothing." - Dr. Ron Paul. "Stand up for what you believe in, even if you are standing alone." - Sophie Magdalena Scholl
    "War is the health of the State." - Randolph Bourne "Freedom is the answer. ... Now, what's the question?" - Ernie Hancock.



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  29. #25
    Hahah

    what you're overlooking is that the ability to expand and contract the money supply - in the hands of a small group of invidividuals - gives them a power over the economy equivalent to 100 hydrogen bombs. They then have the politicians in their pocket, ultimately.



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