patrick.net

“I think that real pressure is going to occur not by the initiation by the Federal Reserve, but by the markets themselves."

Greenspan, speaking to the Council on Foreign Relations, today said that he doubts the Fed can successfully remove QE without significant turmoil. "I don't think it's possible."

The program “hasn’t been a success on the demand side for one fundamental reason,” Greenspan said. “What you’re basically seeing is an explosion of assets, an explosion of reserve balances, and that’s the only two statistics that are moving.”

Few people realize that Greenspan was originally an Austrian School economist who was seduced to the dark side by the lure of power. He believed in his own omnipotence so much he lost sight of the truth. Few people also realize he was a sound money/gold advocate and wrote what is probably one of the best essays on the subject of the need for gold as a backing for currencies. Without it, he says

"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.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the 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."

Greenspan wrote the above in 1967. That he still believes in a gold standard but did nothing to promote its reinstatement during his tenure as Fed chief speaks volumes of his character. I doubt history will treat him well.

A little history...

http://www.globaldeflationnews.com/what-caused-a-brilliant-young-economist-to-veer-so-far-from-his-austrian-school-roots-will-alan-greenspan-go-to-his-grave-wishing-he-had-listened-to-his-former-self/

And the 1967 essay in its entirety...

http://www.globaldeflationnews.com/wp-content/uploads/2014/01/gold_and_economic_freedom.pdf