OFF INTO THE WILD WET YONDER How does this...
Ex-Federal Reserve Chairman Greenspan: Turmoil… Need Gold!
Actually, I’m not certain that “interesting” is the right descriptive here. Perhaps “frightening” or “morose” would be more apt. It almost appears that the infamous money printer has turned into a doom-and-gloomer, not unlike Peter Schiff, Marc Faber, or Jim Rogers.
To a question regarding whether the Federal Reserve is really in control of the situation (19:57), Greenspan answered, “Remember, we’ve never had any experience with anything like this… So I’m not going to sit here and tell you exactly how it’s going to come out.” He expanded on this by adding, “real long-term interest rates are below where human time preference is…”
Whatever that means, it’s certainly not a comforting statement coming from an “insider’s insider,” the ex-leader of the most powerful banking institution in the free world.
But the good Chairman didn’t stop there. To a question regarding the probability of whether the Federal Reserve can exit the current “challenges” without creating another financial crisis (21:44) he replied, “Well, let’s leave the word ‘crisis’ out… if I could use the substitute term ‘turmoil.’ I don’t think it’s possible.”
The most attention-getting comments during his discussion, and certainly the most intriguing to the gold community, show up just under the halfway point (22:52), where he ponders on the statement that global central banks are making by reexamining allocating their gold when prices were low, and how they have renewed their thinking on what place gold plays in monetary reserves.
He then moves on to make a curious point (24:20) regarding a debate in 1944 among a group (included in which was economist John Maynard Keynes) who wanted a fiat currency but couldn’t “counter the fact that the U.S. dollar was convertible into gold and that was the major draw that everyone wanted…”
Afterwards, the interviewer mentions how his statements regarding gold will turn Greenspan into a rock star amongst the gold bugs, and how he will most certainly be trending on Twitter.
I’m not sure about that one, but it does give credence to all those who oppose the Federal Reserve’s handling of the crisis, its quantitative easing (QE) program, and the hot water we are currently in (as well as the coming boiling point).
In all honesty, listening to this discussion take place between a bunch of academics at one of the most notorious think tanks in the United States in a room full of highly credentialed professionals, and hearing some of their questions and Greenspan’s responses, makes me want to run out and buy even more gold and “bury it out back in the yard.”
Not at all encouraging or uplifting, especially knowing that Greenspan was the maestro, and that some of those audience members’ institutions played a direct role in the crisis (and then subsequently a major part in begging the Federal Reserve to bail them out).