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Notice to GATA supporters with America Online email addresses
9:18p ET Tuesday, July 24, 2001
Dear Friend of GATA and Gold:
What a day for GATA and the cause of a free gold market!
* GATA's press release, written by GATA Chairman Bill
Murphy, calling attention to the failure of the Federal
Reserve and the Treasury Department to answer our recent
questions, received good distribution on the Internet,
* The Internet site www.TheMiningWeb.com posted a
major article by its writer, Tim Wood, acknowledging that
the Federal Reserve now has a gold problem, created by its
counsel's unbelievable assertion that he must have been
misquoted by his own agency's secretariat, perhaps the
most careful secretariat in the world, in those remarks
about quot;gold swapsquot; undertaken by the U.S. government.
You can find the Mining Web article here:
Here's the more detailed link for it:
* At a hearing of the Senate Banking Committee, Sen.
Michael Enzi, R-Wyoming, interrogated Fed Chairman
Alan Greenspan about the Fed's decision to join the
Bank for International Settlements and the BIS's seizing
the shares of its private shareholders -- a central issue
in the Reg Howe/GATA lawsuit against the BIS, the
Fed, the Treasury Department, and the bullion banks.
I'll append here a transcript of the Enzi/Greenspan
exchange, provided by GATA's great friend Jay Taylor of
Taylor Hard Money Advisers, publisher of J. Taylor's Gold
amp; Technology Stocks newsletter.
I'll also append an interesting Associated Press story
distributed today about the care and efficiency of Federal
Reserve meetings, since it tends to impugn Fed lawyer
Virgil Mattingly's assertion that he can't remember
talking about quot;gold swapsquot; at a Fed meeting six years
ago and must have been misquoted.
Let me close with a small reply to the suggestion by Tim
Wood of www.TheMiningWeb.com that GATA should lay
off our assertions of conspiracy and our likening the gold
scandal to Watergate. Others have made similar suggestions.
It's GATA's job to make them understand that a conspiracy
to suppress the price of gold has actually been a matter of
public record for three years now, certified by none other
than Fed Chairman Greenspan himself, who, on July 24, 1998,
before the House Banking Committee, and on July 30, 1998,
before the Senate Agriculture Committee, said: quot;Central
banks stand ready to lease gold in increasing quantities
should the price rise.quot;
Since that time the only question has been how far this
conspiracy extends. Pressed by GATA through Sen. Joseph
I. Lieberman two years ago, Greenspan asserted that he had
knowledge of the central bank effort to suppress the gold
price not because he own central bank was part of it but
because he had quot;perceivedquot; what the other central banks
were doing. Of course if the U.S. government has been
involved in quot;gold swaps,quot; as those inconveniently
transcribed Fed minutes indicate, it takes two to tango,
and that would be a conspiracy in itself.
Further, what was the Washington Agreement if not an
open effort by the European central banks to regulate the
gold price, interfering with the free market?
Anyway, since the chairman of the Federal Reserve board
admits that there is a conspiracy to suppress the gold
price, GATA should have the freedom to assert as much as
it undertakes to identify all those involved with the
conspiracy, its methods, its purposes, and its
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
* * *
EXCHANGE BETWEEN FED CHAIRMAN GREENSPAN
AND SENATOR ENZI, SENATE BANKING COMMITTEE
July 24, 2001
Senator Enzi: Another international issue that has
come to my attention and you and I have been
corresponding about it and I appreciate all the
information you have provided. It's about the Bank for
International Settlements. And of course the private
shareholders in the United States -- about 130,000
shares' worth are owned by mutual funds and private
investors. And I'm kind of concerned about what is
going to be done with those shares that are going to be
repurchased and of course I am concerned about a price
that appears to be below the fair value. What is going
to be done with those shares and when will the Federal
Reserve make a decision whether or not to buy or
receive these private shares?
Greenspan: Well, of course we are not involved as a
purchaser or in any way with those shares. Our sole
relationship here is the fact that we have two seats on
the board for BIS, myself and the president of the
Federal Reserve Bank of New York, Bill McDonough. We
very recently joined the board on the grounds that it
was increasingly our conclusion that it was in the best
interest of the United States for us to be on that
board after having for many generations decided not to
be there. We consulted with the State Department, the
Treasury Department, and a number of people on the Hill
to be sure that they saw it the way we did and indeed
that was the case.
With respect to the individual share issue, this was
handeled in a way that the best I could judge was
reasonably sensible. They had a number of investment
banks, reputable investment banks, try to make
evaluations of what the appropriate price should be for
those minority share holders and the same procedure
that goes on in the private sector all the time. And
while we've raised questions in the beginning and
certain things got changed as I recall as a
consequence, at the end we looked at the result as fair
and voted in favor.
Senator Enzi: It was my understanding that this was
done so that the central banks would own all of the
shares. Our central bank will not own any of the
Greenspan: We do not own shares and will not own
Senator Enzi: I'll be addressing a few additional
questions on that that don't pertain to the economy but
I do have a definite interest in it and think that it
will have some effect on the economy so I thank you for
* * *
Fed Meetings: Greenspan Always Wins
By Nancy Benac
The Associated Press
July 24, 2001
WASHINGTON -- The meetings start precisely at 9 a.m. Not
9:01, mind you. The suits are a sea of blue and gray --
pinstriped or solid, for the most part. The chairman
wins every vote -- and it's not even close.
Guided by such tradition and structure, Alan Greenspan
assembles members of the Federal Open Market Committee
around a 27-foot behemoth of a mahogany table eight
times a year for the singular ritual of setting
interest rates that can help shape the economy.
quot;At certain intervals, and this is one of them, there
is a strong feeling that the whole world is watching
you, so that creates a certain amount of tension,'
says Alan Blinder, a former governor of the Federal
Reserve Board, whose members are automatically part of
quot;I was always nervous,quot; admits Susan Phillips, another
Even when the pressure is off, says Blinder, quot;the
meetings are almost always very polite and
No pizza and soda here. Not even coffee, for that
matter. Just gulps of water for those beneath the 23-
foot ceilings and 1,000-pound chandelier of the Federal
Reserve board room. And a largely dispassionate
dissection of how best to nurture the nation's economic
By the time a vote is called around 1 p.m., quot;if you
have a metabolism like mine, you're starving,quot; says
Blinder, who served as vice chairman from 1994-1996.
Finally, a buffet is served, with cold cuts, pickles,
rolls and drinks.
The power of the FOMC -- not to be confused with the
Fruit of the Month Club, jokes Fed governor Laurence
Meyer -- was on display this week when it voted to
reduce a key interest rate by a half-point for the
third time this year.
Banks around the country immediately made corresponding
cuts in prime lending rates, benchmarks for millions of
consumer and business loans. Wall Street, which had
hoped for a bigger rate cut, sent stock prices
The committee is a world unto itself.
It is made up of the seven members of the Federal
Reserve Board (there are two vacancies right now), the
president of the Federal Reserve Bank of New York and a
rotating selection of four of the 11 other reserve bank
presidents from around the country.
In all, about 50 Fed officials and staff members attend
the closed-door meetings, but only the committee
When Greenspan calls things to order, a green light
goes on to signal that the tape recorder is rolling.
One of the first items is the Chart Show - an economic
update by a Fed official wielding colorful graphics.
Next comes a staff presentation on the outlook. (Laid
out in a green-covered book aptly known as the
Then it's on to the two quot;go-roundsquot; -- the core of the
In the quot;outlookquot; round, members discuss their own
views of the economy. Bank presidents generally go
first, their specific order determined by what Meyer
calls the quot;wink system.quot;
quot;Each FOMC member winks at the deputy secretary when he
or she wants to be put on the list of presenters,quot;
Meyer explained in a 1998 speech offering a peek inside
Talk of macroeconomic indicators and the like is mixed
with more earthy examples like surging snow-shovel
sales during miserable weather and even a few telling
stories from the members' own experience.
Phillips, who served on the Fed from 1991 to 1998,
remembers fellow governor Lawrence Lindsey -- now a top
economic adviser to President Bush -- regaling members
when he was turned down for a credit card from Toys R
There isn't much give-and-take in this round. Many
members speak from a prepared text or outline. Chairman
Greenspan usually just listens.
After a much-needed coffee break in the anteroom, the
group reassembles for the crucial quot;policy go-round.quot;
After a staff presentation on options (laid out in the
blue-covered quot;Bluebookquot;), Greenspan leads off,
letting members know his preferred course, followed by
suggestions from the others.
The outcome is a foregone conclusion -- Greenspan will
win. Usually the only suspense is over whether there
will be a vote or two in dissent. How does Greenspan do
quot;He's informally sounded people out,quot; explains
economist David Wyss, a former Fed staff member. quot;He
has a pretty good idea how everybody's going to vote.quot;
Even so, the meetings bring together different
perspectives. quot;Minds can be influenced by what they
hear from their colleagues,quot; says Lyle Gramley, a Fed
member from 1980 to 1985.
Although there may be pointed disagreements, says
Blinder, the discussion is orderly. Even members who
disagree often vote with the majority unless they
absolutely quot;can't livequot; with the decision, since a
divided vote can unsettle Wall Street, he said.
At times, Greenspan, known for his gentle hand in
cajoling consensus, may have to implore members to
stand with him for unity's sake. Fed watchers still
talk about the February 1994 meeting, when most
committee members wanted a bigger rate increase than
quot;I've been on Wall Street since 1948, and I'm telling
you I have a pain in the pit of my stomach,quot; Greenspan
told the committee in unusually blunt language. quot;I
really request that we not do this. ... If we are
perceived to be split on an issue as significant as
this, I think we're risking some very serious problems
for this organization.quot;
Greenspan prevailed -- on a unanimous vote.