In this GATA War The Truth should be visible to the world. My opinion. Dougak
I hope the paying members of the Le Metropole Cafe
and Bill Murphy Le Patron of Le Metropole Cafe
will look at my posting this commentary
as a sacrifice made for the Gata Gold War effort.
James Turk writes below,
[start]
"... it seems clear to me that Mr. Greenspan the technocrat is
very different from Mr. Greenspan the 'sound money man', and this
observation leads to a very important question.
When Mr. Greenspan was testifying before the House Banking Committee
in 1998, was he wearing his technocrat's hat, or was it the hat of
a sound money man? Was he communicating to the world that Gold's
infallible signal (i.e., the Gold price) could not at present be
relied upon because "central banks stand ready to lease gold in
increasing quantities should the price rise"?
I don't have the answer to these questions; no one but Mr. Greenspan
does. And in any case, ....."
[end]
But, whereas James Turk does not have the answer, to what he mentioned above,
he is incorrect in my opinion that "no one but..." does, as some do, and my
information received has been posted by me on this and the Dutch thread many
times, as I stated that Alan is doing the best he can working with the persons
and under the system contained of such, to protect the views he once noted to
believe in, and under a "chit hits the fan" he will be a pro GATA like person
for the simple reason that Alan knows what cause such a poor mess to occur,
and "more of the same" or "try and correct and continue same"
will not work, and will backfire and cause more damage. So Alan will
do what he understands to be "for the best" long term for the banking industry.
Doug A K
"... the Gold price) could not at present be relied upon..."
Subj: James Turk - We Inch Closer to the Truth
Date: 1/25/00 12:33:44 PM EST
From: LePatron@LeMetropoleCafe.com
Le Metropole members,
James Turk of The Freemarket Gold & Money Report
has served commentary at
The Kiki Table entitled, "We Inch Closer to the Truth."
James Turk has a savvy mind and knows the gold market as well as anyone.
An important read.
The Kiki Table
Discussion du Jour: Potpourri
James Turk
The Freemarket Gold & Money Report
January 24, 2000
Interim Letter #257b
We Inch Closer to the Truth
In Letter #233 ("Grist for Conspiracy Theorists", October 26, 1998),
I laid out my view now well known to the readers of these letters that
the price of Gold is being manipulated, and that governments are the
manipulators. The reason for this biased government stance against Gold
is the message that a rising Gold price carries. As I stated back then:
"The Gold price is in essence a report card that measures the success
or failure of government action, through the policies of its captive
central bank, in the area of money and banking."
I then proceeded to justify this statement by providing evidence,
including what I called a 'smoking-gun'. It was a statement by none
other than Alan Greenspan himself before the House Banking Committee
on July 24th of that year. He told those Congressmen that day:
"...central banks stand ready to lease [i.e., lend] gold in increasing
quantities should the price rise".
Since then there has been a lot of interpretation as to what Mr. Greenspan
was actually saying. Also, a lot of people have downplayed the significance
of Mr. Greenspan's remarks. To be honest, I myself had some doubts about the
motive behind his statement, and I only decided to quote Mr. Greenspan after
a lengthy and thorough analysis of his entire testimony that day.
My concern was that some might try arguing that he was only discussing
the lending of Gold in a theoretical sense, and as a consequence, he was
therefore not making a statement of any significance or impact to the
actual depressed state of the Gold price. However, the conclusion of my
analysis was that he was making an important statement, so I published
my article. Nevertheless, some nagging doubt remained whether Mr. Greenspan
was talking theory or reality...until now.
I have written before about GATA, the Gold Anti-Trust Action committee,
and the tremendous work they are doing under the courageous leadership
of Bill Murphy, proprietor of. Like a number of us, GATA is trying to
get to the truth about what is really happening to the Gold price.
Crude oil is at 9-year highs and flirting with $30 per barrel. The CRB
Index is breaking out to the upside. Inflation even by the government's
own statistics (whose reliability is questionable because their data
appear to understate the true inflation rate) is rising. But the price
of Gold remains lackluster, and Gold's one good rally in years was
stopped dead in its tracks last October.
Is it price manipulation? Is the Gold price being controlled by
governments? And even more sensational, is the US government among
the price manipulators?
Let's see how Alan Greenspan might answer these questions.
Because of sheer determination and perseverance, GATA prevailed on
Senator Joseph Lieberman of Connecticut to write to US Treasury
Secretary Lawrence Summers and Alan Greenspan in order to pose a number
of questions that GATA would like answered. Mr. Summers has not yet
responded, but GATA has graciously shared with me Mr. Greenspan's reply,
which I believe will soon be posted in its entirety on the GATA website.
Let me preface my remarks with an observation. Given the importance that
is attached to every remark by Mr. Greenspan, it is not unreasonable to
assume that his letter was carefully reviewed within the Federal Reserve
with a fine-tooth comb. There is no doubt in my mind that it was
reviewed by the Fed's lawyers, and may have even been written by them.
We therefore also have to go through the letter with a fine-tooth comb
in order to decipher what Mr. Greenspan is really telling us.
Having said that, there are two points of particular interest to me.
First, Mr. Greenspan in his letter quotes his testimony before the House
Banking Committee. It now seems clear that I had nothing to worry about
when quoting him back in 1998.
Rather than saying that he was talking about central bank activity
in a theoretical sense, Mr. Greenspan explains to Mr. Lieberman that
the Federal Reserve does not participate in the Gold market (i.e., the
Federal Reserve was not one of the central banks referred to in his
testimony). And then to make the point crystal clear, Mr. Greenspan goes
on to say that his testimony "simply describes the limited capacity of
private parties to influence the gold market by restricting the supply
of gold, given the observed willingness of some foreign central banks
not the Federal Reserve to lease gold in response to price increases"
(my underline for emphasis).
Mr. Greenspan is clearly talking reality here, not theory. When he says
"observed willingness", it is clear that he is talking about real-life
events. Some central banks, but not the Federal Reserve, are lending
Gold when the price increases.
Admittedly, he does not mention motive. But consider the act itself.
Central banks obviously know that their lending of Gold acts to depress
the price. Note also the telling relationship drawn by Mr. Greenspan.
Central banks are not lending Gold when Gold interest rates go up, which
one would think should have been the reasonable way in which to express
the lending of Gold. But Mr. Greenspan clearly states that central banks
lend when the Gold price rises. He doesn't even mention interest rates,
so it is reasonable to conclude that central banks are acting not to
maximize their return, but for some other unstated motive. I contend
that motive is to manipulate the price of Gold.
The second point of particular interest in Mr. Greenspan's letter is the
following statement:
"The Federal Reserve does not, either on its own behalf or on behalf
of others, including other government agencies, lend gold or silver,
facilitate the lending of gold and silver, or trade in any securities,
such as futures contracts and call and put options".
When you first read this statement, it looks pretty clear that the
Federal Reserve has no involvement with Gold. And that is probably
what the lawyers at the Federal Reserve who reviewed, if not completed
crafted, Mr. Greenspan's letter no doubt intended. But don't let
appearances deceive you as to what Mr. Greenspan is saying here.
What is the purpose of the phrase, "including other government
agencies"? If it were deleted, the sentence would be even more clear.
So if we assume that clarity was not the objective, then what does this
phrase add? In a word, plenty.
My copy of Black's Law Dictionary defines the word include as
"to confine within". However, my Webster's Seventh New Collegiate Dictionary
defines include as "to take in or comprise part of a larger aggregate".
Thus, the word include in a legal sense means something entirely
different from include when spoken colloquially.
When the word include is used in legal agreements and it is intended
to have its colloquial meaning, the correct phrase is:
"including but not limited to".
If Mr. Greenspan intended to make clear his statement to both a legal
and colloquial interpretation, he should have used the proper phraseology.
In other words, he should have said "including but not limited to other
government agencies." But he didn't say this. He (or probably more correctly,
the Fed's lawyers) let the casual and untrained reader draw the obvious but
incorrect conclusion from Mr. Greenspan's statement.
Thus, what Mr. Greenspan is actually saying is that the Federal Reserve
does not act for its account or the account of other government agencies
in the Gold market. He is not commenting upon what the Federal Reserve
may or may not be doing for any other potential player. Does it act for
the account of Goldman Sachs or Chase Manhattan? Does it act for the
Bank of England? Does it act for the US Treasury? We don't know. All we
know is that the Federal Reserve does not act for its own account or
that of other government agencies.
Some may assume that Mr. Greenspan means that the Federal Reserve is not
acting for the Treasury, but again, in reality he is not saying that.
Quoting again from my Black's Law Dictionary, an agent is "a person
authorized by another to act for him". Thus, the Treasury is not an
agent of the government, but is the government itself. So Mr. Greenspan's
response clearly does not answer whether or not the Federal Reserve
is acting in the Gold market on behalf of the US Treasury.
Therefore, until Mr. Greenspan says something definitive about the US
Treasury, it is prudent to assume that the Federal Reserve could be
acting for the account of the Treasury.
Had enough word trickery? Well, there is another example of it worth
noting before we move on.
Note that Mr. Greenspan says the "Federal Reserve does not" engage
in these activities. Why doesn't he say the "Federal Reserve System"
doesn't engage in these activities. Or to be even more clear and
precise, why didn't he say the "Federal Reserve System and each of its
twelve regional banks" do not engage in these activities. Is it because
the Federal Reserve as he defines it in this letter means only the Board
of Governors in Washington, and not the Federal Reserve Bank of New
York, whose trading desk it is where most of the alleged government
participation in the Gold market is taking place?
Now before you think I am nit-picking and being generally unreasonable,
let me make one very important point. I never thought I would ever
praise Bill Clinton about anything, but there is in fact one thing for
which we can thank him. Mr. Clinton told the world how important the
definition of the word is is. He wasn't lying about "that woman". He
didn't have a "sexual relationship" with her because in his definition,
being on the receiving end of oral sex was not part of his definition of
a sexual relationship. He could therefore say he was not lying.
Now, I surely do not intend to draw any parallel whatsoever between the
despicable Mr. Clinton and the admirable Mr. Greenspan. But there is an
important point here. Never presume that anyone from the government is
being forthright.
In Mr. Greenspan's case, it is only prudent and logical to assume that
he purposefully excluded the Federal Reserve Bank of New York from his
answer, letting the reader draw his own conclusions about what was meant
by using the term Federal Reserve. Moreover, we must also assume that he
added the phrase "including other government agencies" purposefully. And
as a consequence, we really do not yet have a letter from the Federal
Reserve System and each of the twelve regional banks confirming or denying
whether it is helping the US Treasury to manipulate the price of Gold.
Let me conclude with a few words in defense of Mr. Greenspan, because I think
there are really two sides to this very brilliant individual whom the whole
world clearly respects. First, there is Mr. Greenspan the technocrat.
In his capacity as head of the Federal Reserve, Mr. Greenspan is very
capably doing what he has been hired to do. He is using all of the power
available to the Federal Reserve to keep the fractional reserve banking
system from imploding, which would undermine and destroy the Dollar and
the profits of the banking system that employs him. The Federal Reserve
does not operate for our benefit, but for the benefit of the banks. They
own it (the Federal Reserve is a private corporation), and they control
it (we have seen time and again how the Federal Reserve bails out the
banks when they get into trouble). Thus, like a good soldier following
orders, Mr. Greenspan testifies before Congress and takes the
pro-banking point of view. For example, when Mr. Greenspan makes his oft
repeated testimony that he is against full disclosure of bank derivative
exposure, do you think he is speaking his own personally held view or is
he answering how the banks want him to answer?
The strict control of derivative disclosure is clearly something the
banks want. Admittedly, we don't really know Mr. Greenspan's personal
view, but this brings me to what I called the second Alan Greenspan.
Let's call this side of him the 'sound money man'.
At first blush you may think my second characterization of Mr. Greenspan
to be nonsensical. After all, he sits at the head of an organization
under whose watch since 1913 the Dollar has lost 94% of its purchasing
power. How could he possibly be a 'sound money man'? I think the answer
is simple.
Mr. Greenspan in the 1960's capably wrote about Gold, and demonstrated
his pro-sound money views. Moreover, on numerous occasions in testimony
before Congress he repeated his pro-Gold view, stating further that this
personal view is in a minority among his colleagues at the Federal
Reserve. Thus, it seems clear to me that Mr. Greenspan the technocrat is
very different from Mr. Greenspan the 'sound money man', and this
observation leads to a very important question.
When Mr. Greenspan was testifying before the House Banking Committee in
1998, was he wearing his technocrat's hat, or was it the hat of a sound
money man? Was he communicating to the world that Gold's infallible
signal (i.e., the Gold price) could not at present be relied upon
because "central banks stand ready to lease gold in increasing
quantities should the price rise"?
I don't have the answer to these questions; no one but Mr. Greenspan
does. And in any case, because of his technocrat position as head of the
Federal Reserve, he couldn't tell us anyway unless his bosses (i.e., the
banks) allowed him to. Don't wait for that to happen. But I think that
we should give Mr. Greenspan the benefit of the doubt here.
Personally, I couldn't work for a company that was diametrically opposed to
my personally held views, but every individual is different. And as far as I
am aware, Mr. Greenspan has never commented on the motivations why he assumed
the Fed's chairmanship and why he continues to serve that role.
Clearly, it was Mr. Greenspan the technocrat who wrote the letter to
Mr. Lieberman, but Mr. Greenspan the sound money man is not hiding.
If he were, the letter would not have recorded "the observed willingness
of some foreign central banks...to lease gold in response to price
increases". Importantly we have stepped no, we have inched nearer to
the truth about whether the Gold price is being manipulated.
Copyright 2000 by The Freemarket Gold & Money Report.
All rights reserved.
Send mail to lepatron@lemetropolecafe.com with questions
or comments about the cafe.
Copyright 1998 Le Metropole Cafe
All the best,
Bill Murphy
Le Patron
www.LeMetropoleCafe.com
The above mention of GATA is as follows.
Bill Murphy, Chairman, Gold Anti Trust Action (GATA) gata.org
Also, GATA related articles can be obtained at the pay for view site.
Bill Murphy, Le Patron, Le Metropole Cafe lemetropolecafe.com |
