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"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation" -Alan Greenspan!

After hearing a statement like this, you might have had trouble believing that whoever said it would one day be in charge of the biggest counterfeiter in the history of man.

On the other hand, maybe they want someone who understands this concept since inflation seems to be their very goal.

Greenspan in fact did make this statement in an essay titled: "GOLD AND ECONOMIC FREEDOM."

(It was published in Ayn Rand's "Objectivist" newsletter in 1966, and reprinted in her book, Capitalism: The Unknown Ideal, in 1967.)

Here it is:
~~~~~~~~~~~~~~~~~~~~~~~~~~~

"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society.

Money is the common denominator of all economic transactions.

It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving..."

~~~~~~~~~~~~~~~~~
See Greenspan's entire essay here...
http://constitution.org/mon/greenspan_gold.htm

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A gold standard doesn't stop

A gold standard doesn't stop confiscation through inflation either. You can simply print more paper money than gold you have. The only thing that will stop confiscation through inflation is to let the free market do what it does best and decide the medium of exchange and history shows left to its own devices, the free market will choose hard currencies.

"In reality, the Constitution itself is incapable of achieving what we would like in limiting government power, no matter how well written."

~ Ron Paul, End the Fed

I disagree - A gold standard WOULD restrict inflation if...

...it was strictly adhered to.

But even before 1971 (when the United States cut all ties to any gold standard), there was still inflation because the government required there to be only FRACTIONAL reserves and they could just keep lowering the amount of gold needed to back up the nations' currency.

But it at least SLOWED INFLATION DOWN (Just look at a chart of gold prices since 1971), because there was at least SOME restriction on printing money.

In theory, if you strictly followed a gold standard, inflation would not be an issue because you could only print more money as you aquired more gold.

Economically I don't really think of it as inflation if as you mine more gold, you raise the money supply based on your gold supply because gold is still a rare and difficult thing to obtain.

Now if they discovered a gold planet and could mine gold indefinitely, then gold would lose its value as a rare metal and you would need a new - more rare commodity backing up your currency.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

No no, it totally makes sense

The idea of money is fascination to me, at once seemingly a...

...blessing and a curse.

A medium of exchange is necessary in a society because barter only goes so far. ie: the cobbler has shoes to trade and needs milk but the farmer doesn't need shoes so what is the cobbler to offer for milk?

He would have to find out what the foamer DOES need and try to trade his shoes for that item and then trade it to the farmer for milk.

But if he never is able to trade his shoes to get the item the farmer wants then the cobbler goes without milk.

So money is a good thing.

But the curse is that a centrally comntrolled medium of exchange can be manipulted, devalued or made worthless.

I think the answer is a combination of barter and commodity which society deems worthy of being its "money."

Gold and silver have stood the test of time and barring a massive gold discovery on another planet, the metals will always be the best answer for a stable currency.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Money is a good thing if you

Money is a good thing if you believe annual agriculture is a good thing. The concept of money is an artifact of an unsustainable, annual agricultural system. They're linked and mimic each other. http://youtu.be/kb_t-sVVzF0?t=27m50s

Ask yourself more vicerally, why must you "pay" to live on a planet you were born on? Did hunter gatherer tribes have to "pay" to hunt, fish, and gather?

I suppose you don't have to pay if you farm yourself.

But most people on earth don't produce any food and so must rely on those who do for their survival.

Money then becomes that commodity of value acceptable as an exchange for food by the producers.

But it has to be based on something rare enough to hold value.

Inflation is just the proof that what we use for money loses value because there is no rarity to it anymore.

And that's why preciouse metals have remained a commodity of value that tends to keep its value because you can't print silve and gold.

The U.S. dollar is worth a mere fraction of what it once was because we have decided to ignore this most basic of economic principles and print with no limitations.

You could easily argue that the creation of the Federaal Reserve was the beginning of the end for our experiment in liberty in the United States.

And we 'aint seen nothin' yet.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Artificial Scarcity...

But it has to be based on something rare enough to hold value.

Money as a storage value is important in the artificial scarcity model. The artificial scarcity model should be fundamentally questioned.

Artificial scarcity. Like the diamond industry.

If the diamond cartel's little artifical scarcity secret ever really got out, diamonds would be about worthless. They hide the supplies deep in secret vaults to keep the prices up.

And of course the FED uses this same method to mess with the money supply.

THEY decide behind closed doors how much to put in or take out but they keep it from us.

I don't think the money supply numbers are even published anymore.

The know that if the people could follow this stat that their little game would be up.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Can't live on diamonds.

If the diamond cartel's little artifical scarcity secret ever really got out, diamonds would be about worthless. They hide the supplies deep in secret vaults to keep the prices up.

Can't live on diamonds. What about the basic resources needed to survive?

Michael Nystrom's picture

Bump

Thank you Pawnstorm, for the timely reminder.

Looks like Summers is out:
http://www.marketwatch.com/story/summers-withdraws-from-cons...

Markets partied on that a little today. I guess Mr. Market likes the idea of Janet Yellen.

Hope you're doing well pawnstorm. Nice to see you around these parts.

And nice to hear from you Michael. Thanks for the comments and

...thanks for the DailyPaul.

I feel that we get easily distracted from what the FED is up to.

Ron Paul made many of us aware of what the central bankers are up to during his time in the spotlight, but over time because it's seemingly such a complex issue to understand and because most Americans just don't care, it tends to just go away.

That's why they've lasted for 100 years and ruined our money.

It's real easy for the media, the government and even the central bankers themselves to distract us every day with a different big story or issue or threat or war etc.

The FED has done this ever since they were created 100 years ago otherwise they would no longer exist.

The must LOVE being able to stay under the radar of the citizens while they exert so much influence on the very thing (money) which we work for and use to trade among ourselves for goods and services.

This is why I feel we must stay on this issue through all the media distractions because it feels like the headway Dr. Paul made is slipping away.

You certainly are doing your part.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Fed chairmanship was his "precious"

Funny stuff.

We can't lose track of the Federal Reserve and their tricks.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

HIlarious. Pawnstorm - your headline should read

...Alan Greenspan - a long time ago.

That quote is from 1966, if I'm not mistaken.

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.

That's true, 1966. But it proves he knew better and the sheer...

...irony that someone with such a philosophy would one day head an organization like the Federal Reserve - the world's leading CAUSE of inflation (through their unlimited printing of money).

If Greenspan really believed in those words he wrote (which were absolutely correct), then it makes you wonder how he could have ever accepted his position as head of the Federal Reserve.

I sometimes think those who dictate FED monetary policy actually believe they can control inflation by just playing with the money supply.

They continue to tell us that inflation is low at around 2 or 3 percent.

But while their argument can SEEM to work, if it really did, they never would have changed the way they measure inflation (as they did several years ago).

Why did they take FOOD and ENERGY out of their measurement of inflation???

Food and energy are the very commodities humans cannot live without, so they are the BEST measure of inflation - yet the FED's economists took them OUT of the index.

This proves that inflation is much higher than they tell us it is.

If they hadn't changed the way they measure inflation, there would probably be a public revolt and the FED would be in trouble for their counterfeiting mischief.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Michael Nystrom's picture

Not to mention the way they calculate unemployment now, too

http://www.shadowstats.com/alternate_data/unemployment-charts

That is a great website. Shadowstats.com

He's got unemployment near 25% - which would rival what we saw during the Great Depression.

One thing I don't understand is at the end where Greenspan says:

"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.

Then he says: "There is no safe store of value."

Why wouldn't he consider gold a safe store of value?

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

It's because

he's an idiot. Gold has been valued by people for thousands of years, far longer than anything he could replace it with.

But he probably really is talking about liquidity. Gold is not always liquid for spending. You can't take a gold nugget to the grocery store or gas station and exchange it for product. However with time and effort you can exchange it for something else (like dollars/local fiat) which you can then exchange for product.

Greenspan sure didn't sound like an idiot in that article tho..

Ayn Rand would not have had any interest in publishing an idiot.

So Greenspan KNEW better but he became chief counterfeiter ANYway.

That's not idiocy - that's criminality or at the very least an immoral philosophy.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Greenspan was not an idiot.

Greenspan was not an idiot. In 'End the Fed' book, Ron Paul mentions the exact same thing about Greenspan being a great fan of Ayn Rand. Ron Paul even mentions how he had questioned Greenspan during his Fed Chairman days about his earlier views on Gold standard and what he is doing as a Fed Chairman.

It is clear that Greenspan sold his soul to evil and went down the path of economic destruction.

Greenspan's Reply

Donald Luskin:

"There was a very special article [Greenspan] wrote in 1966 in The Objectivist Newsletter," [Ron Paul] told me, referring to "Gold and Economic Freedom," a powerful plea for the gold standard published by radical capitalist Ayn Rand, then a close friend of Greenspan's. "I have an original copy and Greenspan signed it for me. I asked him if he still believes it, and he said he 'wouldn't change a single word.' Maybe deep down inside he's having a few doubts."

This all reminds me of the time in one interview when Ron Paul said he thought Obama was 'principled', and I said "yep..".

He went over to the dark

He went over to the dark side.

Indeed he did go over to the other side.

And he sure as hell knew better.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul

Good find.

Thanks for posting.

Thanks - It's the sheer irony-of-ironies...

...which caught my eye about Greenspan's statement.

"We have allowed our nation to be over-taxed, over-regulated, and overrun by bureaucrats. The founders would be ashamed of us for what we are putting up with."
-Ron Paul