Greenspan's first sentences in his remarks before the Economic Club of New York yesterday:
Although the gold standard could hardly be portrayed as having produced a period of price tranquility, it was the case that the price level in 1929 was not much different, on net, from what it had been in 1800. But, in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, had allowed a persistent overissuance of money. As recently as a decade ago, central bankers, having witnessed more than a half-century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess.
Here's a link to his entire speech:
federalreserve.gov
And here's a link to James Sinclair's interpretation of Greenspan's remarks:
financialsense.com
Paraphrasing Sinclair: $USD will be allowed to devalue to .80 or less followed by gold once again being linked to the dollar.
I'd enjoy reading comments from this very intelligent thread, especially now that the gold price cheering has abated for a while.
Phil |
