|Greenspan - "Since the late '70s central |
bankers have generally behaved as though we were on the gold standard."
- a quote from him during his Humphrey-Hawkins address this week.
When I heard those words come out of Greenspan's mouth - I choked on my Oatmeal and nearly did an "Elvis" on my TV set... here is Eric Fry of the Daily Reckoning, commenting on Greenspans economic sociopathy:
Greenspan quote ["Since the late '70s central
bankers have generally behaved as though we were on the gold standard."]
We hold our breath. We can hardly believe it. For a moment, we wonder if the Fed chairman is still compus mentis. We smell the sour sentiment behind his words:
He has done everything right...if anything goes wrong, it's not his fault.
Outsiders - terrorists or politicians - will have to mess things up.
But it is the words themselves that are remarkable, almost incredible. If the Fed had acted as though there were a gold standard, then there was no need for a gold standard...or no reason not to have one - a position that no modern central banker would take.
We do not have a gold standard precisely because central bankers do not want to act, and have not acted, as though there were one. A gold standard limits the amount of new money available to increases in the quantity of gold.
This limitation puts central bankers in their place and keeps them there. If both the yuan and the dollar were linked to gold there would be no discussion about what the proper peg to each other should be. And if the American money were linked directly to gold, Americans would have less money to spend...less of a trade deficit...less debt...and less opportunity to get themselves into a real jam.
And if the dollar had been supported by gold, Alan Greenspan wouldn't have been able to create the biggest bubbles in history - bubbles in U.S. and European stocks, real estate all over the world, dollar-based credit, Chinese capital investment...not to mention epic bubbles in conceit and flattering hallucinations.