- December 16, 2014 -
Such words might be taken with a grain of salt if they had been uttered by any regular Joe, but that is simply not the case with Alan Greenspan. From 1987 to 2006 Mr. Greenspan was the highly respected and influential Chairman of the Federal Reserve System. During his tenure, Greenspan enacted policies deemed inflationary by many, defining an era of economic bubbles that ultimately burst. Recent interviews and writings suggest that Mr. Greenspan has returned to his old way of thinking, as he frequently quotes from a highly publicized pro-gold essay of his from 1966. In that essay Mr. Greenspan stated the absence of a gold standard ultimately leads to the loss of wealth through inflation. He also states that the anti-gold sentiment of “welfare states” (in this case the U.S.) is simply a way to hide deficit spending as being “a scheme for the confiscation of wealth.”
Further examination of Mr. Greenspan’s writings reveals his even broader acceptance of gold as an alternative to traditional investments. His writings note that gold has special properties that no other currency, with the possible exception of silver, can claim. For several thousand years gold has had virtually unquestioned acceptance as payment. It has never required the credit guarantee of a third party. No questions are raised when gold or claims to gold are offered in payment of an obligation. Today, the acceptance of fiat money…currency not backed by an asset of intrinsic value…rests on the credit guarantee of sovereign nations with the ability to effectively tax its populace, a guarantee that in crisis situations has not always matched the universal acceptability of gold.
To summarize Mr. Greenspan’s recent words and writings even further: If the US dollar or any other fiat currency were universally accepted at all times, central banks would have no reason to hold any gold. The fact that most central banks do hold gold suggests their currencies are not a universal substitute for gold, even the supposed ‘almighty’ US dollar.
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