Alan Greenspan wrote the following in 1966 before he flipped over to the dark side and joined the financial elite and eventually the Federal Reserve:
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
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."
Let me recap and interpolate Greenspan very simply:
- Governments steal from the people by printing money. Such printing devalues savings that are stored in government mandated money.
- Governments protect their ability to steal using laws. If something stands in its way of theft then that thing must be made illegal.
- Nothing is free but some people get free money called welfare/entitlements, etc. Those “freebies” are not free; they are merely stolen from savers. Government likes welfare because it buys votes. Deficit spending enables more welfare spending. Deficit spending (credit based spending) is a form of inflation. Inflation is used to support the welfare state policies. Inflation steals from savers to support vote buying. Inflation is really about government’s ability to retain power and control. Inflation (and its major form – deficit spending) is thus a direct enemy of anyone who values freedom.
- Governments don’t like gold or the gold standard because gold is the only thing that can call fiat currency a fraud. Gold is a hiding place for personal wealth that governments cannot easily touch. They cannot tax gold. They cannot debase its value forever (even though they continually try as evidenced by GATA and many others). They cannot control gold. Ownership of gold puts a person outside of the hidden system of taxation known as inflation. If the US government crashes one day, gold holders will not only be protected from financial destruction, they will probably become incredibly wealthy.
Yes, all of the above are directly implied or can easily be inferred from Greenspan’s writing and I applaud his honesty on the matter even though he eventually sold out and became an evil pawn. While Greenspan’s words seem to look down upon fiat currency and statism, I will point out that Greenspan appeared to believe that a gold standard is actually worth something and that this belief was expressed a mere 4 years before Nixon, with the stroke of a pen, abolished the gold standard and essentially admitted that we had been cheating on it for years. I’m not sure if that makes him incompetent or a fool.
In truth, the most honest system is not a gold standard (AKA paper that is “good as gold”) but rather the actual exchange of gold (and silver) coins as outlined by the founding fathers and as documented in the constitution:
“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; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.”
Thus I have to disagree with Greenspan’s statement "In the absence of the gold standard, there is no way to protect savings from confiscation through inflation”. There is definitely a way to protect savings from confiscation though inflation even if there is no gold standard and that is to hold gold itself which, IMVHO, has many advantages over holding paper that someone else says is convertible into gold upon demand.
Having said that, I do like the concept of paper money backed by gold. I like its convenience and many other factors associated with it. At the same time I know that whoever is in charge of it will eventually cheat and steal with the power that controlling the currency system lends them. History has proven time and again that gold backed currency is still just fiat currency because there is never as much gold in the vaults to cover the amount of printed paper on the streets. A “gold standard” has always turned out to be nothing more than a wimpy promise – puffery and marketing fluff, if you will, for the crooks who want to keep the gold and give us the paper.
Perhaps we could greatly reduce the human factor of gold backed currency by enabling the automated, computerized monitoring of the nation’s gold supply (example: everyone should be able to go to the gold supply web page and see the gold 24/7/365 and look at the serial numbers online and to review the list of gold bars that the country says is backing the paper currency). In addition, there should be a quarterly audit of the gold supply performed by a panel of common people, much as juries are selected. They would simply follow some procedure to verify that the proper number of bars is present and then they would oversee an automated density test done on a sample of set size but of serial numbers chosen by the panel. In other words, add enough randomness into the process so that the con men would think twice about gaming that part of the system.
Until all of that happens I think I will just continue to like gold metal in coin form in my hands.
You know, just like the constitution says is the correct way to do things. ; )
