I found this little gem, and added it to my collection of reminders that Greenspan said that fiat money 'worked' because central bankers had learned to 'replicate' the gold standard through their policy actions. I had said 'emulate' but perhaps that was a quirk of memory.
This is from a publicly published note by Jude Wanniski titled Savings Glut.
From: Jude Wanniski < jwanniski@polyconomics.com
To: Ben.S.Bernanke@ * * * * *.GOV
Subject: Fwd: Re: Savings glut
5:44 pm, 7/21/2005
"Greenspan was plain awful in his testimony this week. But members of Congress don't know any better, so they slobber all over him. He again said we don't need a gold standard, because he has demonstrated since he came to the Fed in 1987 that the central bank could 'replicate' the gold standard.
Take a look at the dollar/gold price from 1987 until today and you will see how terrific he has been in replicating the gold standard. I can't wait for him to leave, Ben, because he now has so much invested in his Fed legacy as a Maestro that he could never admit he screwed up almost all along the way."
Wanniski sent this to Bernanke, who was at that time either on the Fed Board of Governors, or on the Council of Economic Advisors to W Bush. I can't recall the exact date of the transition.
And I also like this note because it helps to dispel the myth that the Fed does not watch and worry about the price of gold, which we have known about for quite some time. It is tied to their aspirations on interest rates, through the management of market perception. Larry Summers wrote about this relationship in Gibson's Paradox.
Well, nothing has changed, the irresponsibles are still in charge, and they are being defended by their economic partisans while they degrade the national currency to support the looting of the system by their cronies from Wall Street and the Banks.
The idea that stuffing the one percent's already swollen pockets with even more hot money will stimulate the economy would be funny if it was not having such tragic consequences, with even worse to come.
My only regret is that I wasted so much time trying to raise these concerns on economic chat sites with establishment economists who clearly did not wish to hear or see anything but the party line. This is about when Brad DeLong, in explaining why he had to censor my concerns about Greenspan's monetary policy and the growing credit bubble said, "Greenspan never made a policy decision with which I disagreed." Well Brad, how did that work out in retrospect?
And as bad as the neo-Keynesians may be, the Chicago-Columbia austerity crowd are even worse. Economics is a generally disgraced profession with only a few bright lights.
The stock, bond, and commodity markets are a joke. The Banking System resembles a control fraud.
The manipulation of the metals, equity, and credit markets is approaching a financial war crime, it is so contemptible. Although I am sure it will have its bureaucratic defenders.
At long last, they have no shame.
Another crisis is coming. They know it is coming, and are attempting to cover it up while they make themselves and their patrons comfortable. They are trying to stifle all alarms and indicators to the contrary.
The market is whatever we say it is, indeed. And this time it will be worse.
I am sorry to speak so bluntly. I keep trying to maintain some optimism, but these jokers are barking at the moon. This disconnect between reality and the official story is becoming almost unbelievable.
