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Bob,
<p>I agree that the language of James Taylor may have offended the sensibilities
of a number of us but, the content of his message is not an isolated opinion
and one in which I agree. Greenspan works for <b>private bankers
who control the currency of the United States </b>and, through credit creation,
has created the biggest bubble in history. In fairness to him, he
works for the private bankers.
<p>http://www.fame.org/HTM/President16.htm
<p>Alan Greenspan: "The abandonment of the gold standard made it
possible for the welfare statists<u> to use the banking system as a means
to an unlimited expansion of credit.</u>" ..... which he is recklessly
using for every conceivable bailout of those "to large to let fail"....
the chosen ones. The complete article is attached, which he wrote
at a time when he had principles.
<br>----
<br>Regards,
<p>DS
<br>
<br>
<p>BobsKC wrote:
<blockquote TYPE=CITE>Wouldn't it be wonderful if mail lists could ascertain
the age of those
<br>subscribing and limit those who are allowed on the list to a maturity
level
<br>of say, the average 8 yr old? Nothing in this post is true
and worse, it
<br>is a foundless tirade at the foundation of our current unemployment
rate
<br>which equals the lowest rates in 30 yrs. Maybe even low
enough that our
<br>Mr Taylor will find a job when he grows up.
<p>Bob
<p>At 08:05 PM 10/4/99 -0700, James Taylor wrote:
<br>>If the scum-sucker Greenspan has any spine at all, he will raise tomorrow,
<br>>and catch the gambling public flat-footed. This 'man'
(and I use the term
<br>>loosely) will be hated by tens of millions of American's when this
ponzi
<br>>scheme finally ends. A heck of a lot of innocent, hard-working
citizens
<br>>will be hurt by his past bubble cultivation. When the blind-sided
public
<br>>end up unemployed, their families put on the street, and hungry, this
joker
<br>>will think long and hard about the choices he made. I wouldn't
want to be
<br>>him. Rednecks don't act rationally when they are hungry and
cold.
<br>>
<br>>Signed,
<br>>an informed student of economics and government mismanagement and
deception
<br>>
<br>>-------------
<br>>
<br>>At 09:42 PM 10/4/99 -0400, RAY RAFFURTY wrote:
<br>>>Hi Gary,
<br>>>
<br>>>Actually, to get a jump on the Fed. meeting tune into CNBC at about
8:00 AM
<br>>>EST for Mr. Greenspan's briefcase indicator. It has been correct
something
<br>>>like 18 out of the last 19 times. {;-)
<br>>>
<br>>>
Good luck and good trading,
<br>>>
<br>>>
Ray Raffurty
<br>>>
<br>>>
<br>>>----- Original Message -----
<br>>>From: Gary Fritz <fritz@xxxxxxxx>
<br>>>To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxx>
<br>>>Sent: Monday, October 04, 1999 4:34 PM
<br>>>Subject: FOMC meeting?
<br>>>
<br>>>
<br>>>> I'm holding a long position into tomorrow and I figured I'd check...
<br>>>>
<br>>>> The FOMC meeting starts tommorrow morning at 0900 ET. But
there is
<br>>>> usually not any impact from the *start* of the meeting, right?
Any
<br>>>> fireworks, if any are to happen, shouldn't launch until they announce
<br>>>> on Thursday at 1400 ET?
<br>>>>
<br>>>> The market doesn't seem to think Mr. G. will drop any bombs on
<br>>>> Thursday, given the run-up since Friday afternoon. Anybody
want to
<br>>>> hazard any predictions?
<br>>>>
<br>>>> Thanks,
<br>>>> Gary
<br>>>>
<br>>>>
<br>>>>
<br>>>
<br>>>
<br>>>
<br>></blockquote>
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<TITLE>Gold and Economic Freedom</TITLE>
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<BLOCKQUOTE>
<P><FONT SIZE=7 COLOR="#ffff00">Gold and<BR>Economic<BR>Freedom</FONT><BR><FONT SIZE="+1" COLOR="#FF0000">By ALAN GREENSPAN</FONT></P>
<P><FONT SIZE="+1">An almost hysterical antagonism toward the gold standard is one
issue which unites statists of all persuasions. They seem to
sense-perhaps more clearly and subtly than many consistent defenders
of laissez-faire-that gold and economic freedom are inseparable, that
the gold standard is an instrument of laissez-faire and that each implies
and requires the other.</FONT></P>
<P><FONT SIZE="+1">In order to understand the source of their antagonism, it is necessary
first to understand the specific role of gold in a free society.</FONT></P>
<P><FONT SIZE="+1">Money is the common denominator of all economic transactions. It is
that commodity which serves as a medium of exchange, is universally
acceptable to all participants in an exchange economy as payment for
their goods or services, and can, therefore, be used as a standard of
market value and as a store of value, i.e., as a means of saving.</FONT></P>
<P><FONT SIZE="+1">The existence of such a commodity is a precondition of a division of
labor economy. If men did not have some commodity of objective
value which was generally acceptable as money, they would have to
resort to primitive barter or be forced to live on self-sufficient farms
and forgo the inestimable advantages of specialization. If men had
no means to store value, i.e., to save, neither long-range planning nor
exchange would be possible.</FONT></P>
<P><FONT SIZE="+1">What medium of exchange will be acceptable to all participants in an
economy is not determined arbitrarily. First, the medium of exchange
should be durable. In a primitive society of meager wealth, wheat might
be sufficiently durable to serve as a medium, since all exchanges would
occur only during and immediately after the harvest, leaving no
value-surplus to store. But where store-of-value considerations are
important, as they are in richer, more civilized societies, the medium
of exchange must be a durable commodity, usually a metal. A metal is
generally chosen because it is homogeneous and divisible: every unit is
the same as every other and it can be blended or formed in any quantity.
Precious jewels, for example, are neither homogeneous nor divisible.</FONT></P>
<P><FONT SIZE="+1">More important, the commodity chosen as a medium must be a luxury.
Human desires for luxuries are unlimited and, therefore, luxury goods
are always in demand and will always be acceptable. Wheat is a luxury
in underfed civilizations, but not in a prosperous society. Cigarettes
ordinarily would not serve as money, but they did in post-World War II
Europe where they were considered a luxury. The term "luxury good"
implies scarcity and high unit value. Having a high unit value, such a
good is easily portable; for instance, an ounce of gold is worth a
half-ton of pig iron.</FONT></P>
<P><FONT SIZE="+1">In the early stages of a developing money economy, several media
of exchange might be used, since a wide variety of commodities would
fulfill the foregoing conditions. However, one of the commodities will
gradually displace all others, by being more widely acceptable.
Preferences on what to hold as a store of value, will shift to the most
widely acceptable commodity, which, in turn, will make it still more
acceptable. The shift is progressive until that commodity becomes
the sole medium of exchange. The use of a single medium is highly
advantageous for the same reasons that a money economy is superior
to a barter economy: it makes exchanges possible on an incalculably
wider scale. </FONT></P>
<P><FONT SIZE="+1">Whether the single medium is gold, silver, sea shells, cattle, or tobacco
is optional, depending on the context and development of a given
economy. In fact, all have been employed, at various times, as media
of exchange. Even in the present century, two major commodities,
gold and silver, have been used as international media of exchange,
with gold becoming the predominant one. Gold, having both artistic and
functional uses and being relatively scarce, has always been considered
a luxury good. It is durable, portable, homogeneous, divisible, and,
therefore, has significant advantages over all other media of exchange.
Since the beginning of Would War I, it has been virtually the sole
international standard of exchange. </FONT></P>
<P><FONT SIZE="+1"> If all goods and services were to be paid for in gold, large payments
would be difficult to execute, and this would tend to limit the extent of
a society's division of labor and specialization. Thus a logical extension
of the creation of a medium of exchange, is the development of a
banking system and credit instruments (bank notes and deposits)
which act as a substitute for, but are convertible into, gold.</FONT></P>
<P><FONT SIZE="+1">A free banking system based on gold is able to extend credit and thus
to create bank notes (currency) and deposits, according to the
production requirements of the economy. Individual owners of gold
are induced, by payments of interest, to deposit their gold in a bank
(against which they can draw checks). But since it is rarely the case
that all depositors want to withdraw all their gold at the same time,
banker need keep only a fraction of his total deposits in gold as
reserves. This enables the banker to loan out more than the amount of
his gold deposits (which means that he holds claims to gold rather
than gold as security for his deposits). But the amount of loans which
he can afford to make is not arbitrary: he has to gauge it in relation
to his reserves and to the status of his investments.</FONT></P>
<P><FONT SIZE="+1">When banks loan money to finance productive and profitable
endeavors, the loans are paid off rapidly and bank credit continues to
be generally available. But when the business ventures financed by
bank credit are less profitable and slow to pay off, bankers soon find
that their loans outstanding are excessive relative to their gold
reserves, and they begin to curtail new lending, usually by charging
higher interest rates. This tends to restrict the financing of new
ventures and requires the existing borrowers to improve their
profitability before they can obtain credit for further expansion. Thus,
under the gold standard, a free banking system stands as the
protector of an economy's stability and balanced growth.</FONT></P>
<P><FONT SIZE="+1">When gold is accepted as the medium of exchange by most or all
nations, an unhampered free international gold standard serves to
foster a world-wide division of labor and the broadest international
trade. Even though the units of exchange (the dollar, the pound, the
franc, etc.) differ from country to country, when all are defined in
terms of gold the economies of the different countries act as one--so
long as there are no restraints on trade or on the movement of capital.
Credit, interest rates, and prices tend to follow similar patterns in all
countries. For example, if banks in one country extend credit too
liberally, interest rates in that country will tend to fall, inducing
depositors to shift their gold to higher-interest paying banks in other
countries. This will immediately cause a shortage of bank reserves
in the "easy money" country, inducing tighter credit standards and a
return to competitively higher interest rates again. </FONT></P>
<P><FONT SIZE="+1">A fully free banking system and fully consistent gold standard have
not as yet been achieved. But prior to World War I, the banking system
in the United States (and in most of the world) was based on gold,
and even though governments intervened occasionally, banking was
more free than controlled. Periodically, as a result of overly
rapid credit expansion, banks became loaned up to the limit of their
gold reserves, interest rates rose sharply, new credit was cut off,
and the economy went into a sharp, but short-lived recession.
(Compared with the depressions of 1920 and 1932, the
pre-World War I business declines were mild indeed.) It was limited
gold reserves that stopped the unbalanced expansions of business
activity, before they could develop into the post- World War I type
of disaster. The readjustment periods were short and the
economies quickly reestablished a sound basis to resume expansion. </FONT></P>
<P><FONT SIZE="+1">But the process of cure was misdiagnosed as the disease: if shortage
of bank reserves was causing a business decline- argued economic
interventionists-why not find a way of supplying increased reserves
to the banks so they never need be short! If banks can continue to
loan money indefinitely--it was claimed--there need never be any
slumps in business. And so the Federal Reserve System was
organized in 1913. It consisted of twelve regional Federal Reserve
banks nominally owned by private bankers, but in fact government
sponsored, controlled, and supported. Credit extended by these
banks is in practice (though not legally) backed by the taxing power
of the federal government. Technically, we remained on the gold
standard; individuals were still free to own gold, and gold continued
to be used as bank reserves. But now, in addition to gold, credit
extended by the Federal Reserve banks (paper reserves) could
serve as legal tender to pay depositors.</FONT></P>
<P><FONT SIZE="+1">When business in the United States underwent a mild contraction in
1927, the Federal Reserve created more paper reserves in the hope
of forestalling any possible bank reserve shortage. More disastrous,
however, was the Federal Reserve's attempt to assist Great Britain
who had been losing gold to us because the Bank of England
refused to allow interest rates to rise when market forces dictated
(it was politically unpalatable). The reasoning of the authorities
involved was as follows: if the Federal Reserve pumped excessive
paper reserves into American banks, interest rates in the
United States would fall to a level comparable with those in Great
Britain; this would act to stop Britain's gold loss and avoid the
political embarrassment of having to raise interest rates. </FONT></P>
<P><FONT SIZE="+1">The "Fed" succeeded: it stopped the gold loss, but it nearly destroyed
the economies of the world, in the process. The excess credit which
the Fed pumped into the economy spilled over into the stock
market-triggering a fantastic speculative boom. Belatedly, Federal
Reserve officials attempted to sop up the excess reserves and finally
succeeded in braking the boom. But it was too late: by 1929 the
speculative imbalances had become so overwhelming that the
attempt precipitated a sharp retrenching and a consequent
demoralizing of business confidence. As a result, the American
economy collapsed. Great Britain fared even worse, and rather than
absorb the full consequences of her previous folly, she abandoned
the gold standard completely in 1931, tearing asunder what remained
of the fabric of confidence and inducing a world-wide series of bank
failures. The world economies plunged into the Great Depression of
the 1930's. </FONT></P>
<P><FONT SIZE="+1">With a logic reminiscent of a generation earlier, statists argued that
the gold standard was largely to blame for the credit debacle which
led to the Great Depression. If the gold standard had not existed,
they argued, Britain's abandonment of gold payments in 1931 would
not have caused the failure of banks all over the world. (The irony was
that since 1913, we had been, not on a gold standard, but on what
may be termed "a mixed gold standard"; yet it is gold that took the
blame.) </FONT></P>
<P><FONT SIZE="+1">But the opposition to the gold standard in any form-from a growing
number of welfare-state advocates-was prompted by a much subtler
insight: the realization that the gold standard is incompatible with
chronic deficit spending (the hallmark of the welfare state). Stripped
of its academic jargon, the welfare state is nothing more than a
mechanism by which governments confiscate the wealth of the
productive members of a society to support a wide variety of welfare
schemes. A substantial part of the confiscation is effected by taxation.
But the welfare statists were quick to recognize that if they wished to
retain political power, the amount of taxation had to be limited
and they had to resort to programs of massive deficit spending, i.e.,
they had to borrow money, by issuing government bonds, to finance
welfare expenditures on a large scale. </FONT></P>
<P><FONT SIZE="+1">Under a gold standard, the amount of credit that an economy can
support is determined by the economy's tangible assets, since every
credit instrument is ultimately a claim on some tangible asset. But
government bonds are not backed by tangible wealth, only by the
government's promise to pay out of future tax revenues, and cannot
easily be absorbed by the financial markets. A large volume of new
government bonds can be sold to the public only at progressively
higher interest rates. Thus, government deficit spending under a
gold standard is severely limited. </FONT></P>
<P><FONT SIZE="+1">The abandonment of the gold standard made it possible for the
welfare statists to use the banking system as a means to an
unlimited expansion of credit. They have created paper reserves in
the form of government bonds which-through a complex series of
steps-the banks accept in place of tangible assets and treat as if
they were an actual deposit, i.e., as the equivalent of what was
formerly a deposit of gold. The holder of a government bond or of a
bank deposit created by paper reserves believes that he has
a valid claim on a real asset. But the fact is that there are now more
claims outstanding than real assets. </FONT></P>
<P><FONT SIZE="+1">The law of supply and demand is not to be conned. As the supply of
money (of claims) increases relative to the supply of tangible assets
in the economy, prices must eventually rise. Thus the earnings saved
by the productive members of the society lose value in terms of goods.
When the economy's books are finally balanced, one finds that
loss in value represents the goods purchased by the government for
welfare or other purposes with the money proceeds of the
government bonds financed by bank credit expansion. </FONT></P>
<P><FONT SIZE="+1">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. </FONT></P>
<P><FONT SIZE="+1">This is the shabby secret of the welfare statists' tirades against gold.
Deficit spending is simply a scheme for the "hidden" 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.</FONT></P>
<CENTER><P><FONT SIZE="+1"> </FONT><FONT SIZE="7" COLOR="#FF0000">* * * * * * *</FONT><FONT SIZE="+1"> </FONT></P>
<P><FONT SIZE="+1" COLOR="#FF0000">As reprinted from the book "Capitalism, the Unknown Ideal"<BR>by Ayn Rand with additional articles by Alan Greenspan - 1967.</FONT></P></CENTER>
<HR ALIGN="CENTER" SIZE="3" WIDTH="100%">
<CENTER><P><FONT SIZE="+1">Other articles by Alan Greenspan</FONT></P></CENTER>
<HR ALIGN="CENTER" SIZE="3" WIDTH="100%">
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</x-html>From ???@??? Tue Oct 05 06:47:06 1999
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Message-ID: <01BF0F0F.26F8F840.ggautier@xxxxxxxxxxx>
From: Gwenael Gautier <ggautier@xxxxxxxxxxx>
Reply-To: "ggautier@xxxxxxxxxxx" <ggautier@xxxxxxxxxxx>
To: "'fritz@xxxxxxxx'" <fritz@xxxxxxxx>,
RealTraders Discussion Group
<realtraders@xxxxxxxxxxxx>
Subject: AW: FOMC meeting?
Date: Tue, 5 Oct 1999 08:53:53 +0100
Organization: CDC Marches FKT
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Status:
All sorts of weird things can happen in a market place. Sometimes everybody can
be convinced in the last day that one decision is going to be taken and then
not react when it comes out, or on the contrary move further, or drop on the
news... You really never know. Basically it is not a good idea to bet on an
outcome. Best is still to buy on a market configuration you feel comfortable
with. If it is correct, events will prove your position right, even if they
come out differently then expected. The markets ways are unfathomable to
paraphrase a famous word... If your position is wrong, whatever comes out, the
tide will sweep it away and you'll find out fairly soon you're driving on the
wrong side of the hiway...
Gwenn
| -----Ursprungliche Nachricht-----
| Von: Gary Fritz [SMTP:fritz@xxxxxxxx]
| Gesendet am: Monday, October 04, 1999 9:34 PM
| An: RealTraders Discussion Group
| Betreff: FOMC meeting?
|
| I'm holding a long position into tomorrow and I figured I'd check...
|
| The FOMC meeting starts tommorrow morning at 0900 ET. But there is
| usually not any impact from the *start* of the meeting, right? Any
| fireworks, if any are to happen, shouldn't launch until they announce
| on Thursday at 1400 ET?
|
| The market doesn't seem to think Mr. G. will drop any bombs on
| Thursday, given the run-up since Friday afternoon. Anybody want to
| hazard any predictions?
|
| Thanks,
| Gary
|
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