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Transcript of Paul exchange with Greenspan
10:15p ET Wednesday, February 27, 2002
Dear Friend of GATA and Gold:
Our hero, U.S. Rep. Ron Paul, R-Texas, had an
interesting exchange with Federal Reserve
Chairman Alan Greenspan today before the House
Financial Services Committee, wherein the most
terrifying four-letter word in Washington was
Paul cited a speech Greenspan gave in January
to the American Numismatic Society in which
Greenspan seemed to question whether the
fiat monetary system would continue to work.
In that speech, Greenspan had joked that, if
the fiat system failed, the country might have
to go back to using sea shells and oxen as
money, and he promised that the Fed's discount
window would maintain an adequate supply of
Paul suggested that managing the Fed is like
managing Enron, insofar as their accounting is
similar. That is, Paul said, money is borrowed
into being in the United States -- the government
borrows money, issues instruments for that debt,
and then those debt instruments are treated as
assets on the books of everyone holding them.
In earlier remarks to the committee, Paul noted,
Greenspan said Enron had operated by quot;capitalizing
its reputation while holding few assets.quot; Paul said
this was just like the Fed itself.
Then the four-letter word came in. Gold, Paul said,
is giving a hint of inflation despite the efforts of
central banks to push the gold price back down.
Greenspan did not respond to Paul's remarks
about gold, and since just moments earlier
Greenspan HAD disputed remarks by Rep.
Bernard Sanders, D-Vermont, about market
concentration in certain industries, it's a fair
assumption that Greenspan CHOSE not to deny
that central banks are trying to suppress the
The Fed chairman told Paul that he quot;hopedquot;
that there are quot;fundamental differencesquot; between
Enron's and the Fed's operations.
Fiat currency, Greenspan said, indeed has
been mismanaged into inflation, but, he added,
quot;We're learning how to manage fiat currency.quot;
Of course with a little candor Greenspan might
have added that managing fiat currency lately
has been a matter of managing the gold price
Greenspan said he remained skeptical of fiat
currency but recent evidence quot;is that it has
Well, let's all stick around and see how much
longer it succeeds.
Greenspan concluded his reply to Paul by saying
that quot;I don't perceivequot; that the Fed is doing anything
like Enron. The Fed, the chairman said, is being
quot;transparent,quot; but added, tellingly: quot;except where
it inhibits the Fed's ability to function as a central
Committee members are allotted only a few minutes
at these hearings, and Paul could not follow up
on Greenspan's reply. But Greenspan's conclusion
seemed to acknowledge that he seems the basic
functions of a central bank as requiring keeping
the public ignorant about the most important
With luck that important stuff may be discussed if
a hearing is ever held on Paul's legislation to
require the Treasury Department, the Exchange
Stabilization Fund, and the Fed to get the approval
of Congress for any intervention in the gold market.
Some of our people are upset that CNBC's coverage
of Greenspan's appearance before the House
Financial Services Committee was interrupted during
Paul's questioning as the network switched to a
hearing on Enron. Whether or not this was the
result of CNBC's hatred of gold, which is the enemy
of all the imaginary investments CNBC has touted for
years, you can see the Greenspan-Paul exchange for
yourself over the Internet, courtesy of that
ever-more-wonderful network, C-SPAN.
Scroll a third of the way down the page and look
for the quot;Recent Programsquot; section. At this hour
the second entry is for Greenspan's appearance.
Click on quot;watch,quot; and good luck.
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.