Here is another piece from GreenShit!
Wednesday February 24, 6:56 pm Eastern Time
GREENSPAN Q&A: PART X - Gold, Argentina,
Dollar
NEW YORK, Feb 24 (Reuters) - Following are excerpts from the question-and-answer
session after the second leg of Federal Reserve Chairman Alan Greenspan's semiannual
Humphrey-Hawkins testimony before the House Banking Committee on Wednesday:
REP PAUL:''Is the price of gold still valuable as an indicator and a monetary tool as in the 1960s and does the government
still buy and sell gold?''
GREENSPAN: "The price of gold has over the decades been a generally usable indicator of what the level of inflation has
been. Obviously, during the period of the active gold standard, which was really prior to World War I, the price level locked
itself into the gold price and by definition it did.
The issue of buying and selling gold as the price changes is indeed exactly what we used to do. There used to be a thing called
the gold points, which was the price of gold plus transportation cost differentials. We, the U.S. Treasury, stood ready to buy
and sell gold at a spread ... Needless to say, since we've gone off the gold standard and especially since 1973, there's been a
general float of the dollar vis a vis gold, which means the gold price is like another commodity's price. Nonetheless, like a lot of
commodities prices, and perhaps better than most, it has been useful in my judgment in trying to get some sense of what
inflationary pressures have evolved in this country."
REP PAUL: ''Even if central banks are willing to sell gold, what is their motivation?''
GREENSPAN: ''They are not doing it to fix the gold price. They are looking to sell stock of gold when they've sold on the
grounds that 1) it costs to store the gold and 2) it didn't obtain any interest. So, they perceived it to be a poor asset to hold.
The purpose was not to manipulate the price of gold.''
REP PAUL:''There have been studies whether Argentina can use the dollar as their currency. There have also been reports
that there has been consideration the Federal Reserve could become the lender of last resort and Argentina could have access
to the discount window. Also, how does it work when a country dollarizes? Does that put an obligation on us and can that
interfere with dollar's value?''
GREENSPAN: ''Good question Congressman. The answer is No. We view monetary policy in the United States as FOR the
United States. We have no interest in, nor does Treasury, the issue of being lender of last resort outside the United States. The
issue of whether another country wishes to use the American dollar as its means of exchange is their's to make. They can do it
unilaterally. Panama did. Liberia did. If they choose to do that, it's their sovereign right to do that. But we have no obligation in
that regard. Clearly, we do sense some obligation with respect to our Latin American colleagues for the same reason that we
have had relationships with all our trading partners. Their interests do concern us. We would like them to be prosperous to the
extent we are helpful and trade and other negotiations that's fine. But lender of last resort? No.'' |
