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U.S. Rep. Ron Paul Greens Book of Ron Paul Greens State Of The Republic 28 January 1998    1998 Ron Paul 2:72 Instead, the dollar was crowned king, and Greenspan promised stability. Our real interest rates, balance of payments, our current account deficit and budgetary deficits were conveniently ignored, because if they had been looked at seriously, it would have been recognized that the U.S. and the world faces a major financial crisis once the dollar can no longer be used to bail out the world financial system. Greens The Bubble 28 April 1998    1998 Ron Paul 39:3 According to an article in The New Republic, Greenspan is not only held in high esteem on Wall Street, he is seen as Godlike. One trader is quoted as saying, “When things go well, I hold Greenspan’s picture between my hands and say, thank you. When things go poorly, I also take the photo in my hands and pray.” And he is not alone on Wall Street in heaping praise on Greenspan. This comes as close to idolatry as one can get. Greens The Bubble 28 April 1998    1998 Ron Paul 39:4 Alan Greenspan took over the Fed a few months before the stock market crash of October, 1997. In the 10 years that Greenspan has headed the Fed, $2 trillion of new credit has been created as measured by M3. Banks threatened by bankruptcy in the early 1990s received generous assistance from the Fed policy of low interest rates and rapid credit expansion as a response to the recession of 1991. Fed fund rates were held at 3 percent for well over a year. This generous dose of Fed credit has fueled the 5-year superboom on Wall Street. Greens The Bubble 28 April 1998    1998 Ron Paul 39:45 THE SOLUTION The solution to all of this is not complex. But no effort is going to be made to correct the problems that have allowed our financial bubble to develop, because Alan Greenspan has been practically declared a god by more than one Wall Street guru. Because Alan Greenspan himself understands Austrian free-market economics and the gold standard, it is stunning to see him participate in the bubble when he, deep down inside, knows big problems lurk around the corner. Without the motivation to do something, not much is likely to happen to our monetary system in the near future. Greens The Bubble 28 April 1998    1998 Ron Paul 39:53 WASHINGTON MENTALITY Every politician I know in Washington is awestruck by Greenspan. The article in The New Republic reflects the way many Members of Congress feel about the “success” of Greenspan over the last ten years. Add to this the fact that there is no significant understanding of the Austrian business cycle in Washington, and the likelihood of adopting a solution to the pending crisis, based on such an understanding, is remote. Greens The Indonesia Crisis 19 May 1998    1998 Ron Paul 52:16 The Indonesian government had one idea worth considering under these very difficult circumstances. They wanted to replace their central bank with a currency board. It’s not the gold standard, but it would have been a wise choice under current conditions. But the United States and the IMF insisted that in order to qualify for IMF funding this idea had to be rejected outright and the new central bank for Indonesia had to be patterned after the Federal Reserve with, I’m sure, ties to it for directions from Greenspan and company. A currency board would allow a close linkage of the rupiah to the dollar, its value controlled by market forces, and would have prevented domestic Indonesia monetary inflation — the principle cause of the economic bubble now collapsed. The shortcoming of a currency board is that the Indonesian currency and economy would be dependent on dollar stability which is far from guaranteed. Greens The Indonesia Crisis 22 May 1998    1998 Ron Paul 54:16 The Indonesian Government had one idea worth considering under these very difficult circumstances. They wanted to replace their central bank with a currency board. It’s not as good as gold standard, but it would have been a wise choice under current conditions. But the United States and the IMF insisted that in order to qualify for IMF funding this idea had to be rejected outright and the new central bank for Indonesia had to be patterned after the Federal Reserve with, I’m sure, ties to it for directions from Federal Reserve Board Governor Alan Greenspan and company. A currency board would allow a close linkage of the rupiah to the dollar, with its value controlled by market forces, and would have prevented domestic Indonesia monetary inflation — the principle cause of the economic bubble now collapsed. The shortcoming of a currency board tied to the U.S. dollar is that the Indonesian currency and economy would be dependent on dollar stability which is far from guaranteed. Greens Campaign Finance Reform 23 June 1998    1998 Ron Paul 64:11 Take, for instance, some of the groups that have tried in the past to get on and become known but are frustrated by all these rules. There are Independents, Socialists, Greens, Taxpayers Party, Populists, Libertarians, Constitutionalists, Reform Party, Natural Party, American Party, Liberal Party, Conservative Party, Right to Life, Citizens Party, New Alliance Party, Prohibition Party, States Rights Party. All these people have been totally frustrated because they have so many obstacles put in their way by the requirement of huge numbers of signatures on ballots. Greens Revamping The Monetary System 24 September 1998    1998 Ron Paul 102:5 Yesterday also Greenspan announced that he would lower interest rates. I do not think this was an accident or not coincidental. It was coincidental that at this very same time they were meeting this crisis, Greenspan had to announce that, yes indeed, he would inflate our currency, he would expand the money supply, he would increase the credit, he would lower interest rates. At least that is what the markets interpreted his statement to mean. And the stock market responded favorably by going up 257 points. Greens Revamping The Monetary System 24 September 1998    1998 Ron Paul 102:11 I would like to remind my colleagues that when the Federal Reserve talks about lowering interest rates, like Mr. Greenspan announced yesterday, or alluded to, this means that the Federal Reserve will create new credit. Where do they get new credit and new money? They get it out of thin air. This, of course, will lower interest rates in the short run and this will give a boost to a few people in trouble and it will bail out certain individuals. Greens Congress Relinquishing The Power To Wage War 2 February 1999    1999 Ron Paul 4:71 The Federal Reserve Board Chairman Alan Greenspan, when the Dow was at approximately 6,500, cautioned the Nation about irrational exuberance and for a day or two the markets were subdued. But while openly worrying about an unsustained stock market boom, he nevertheless accelerated the very credit expansion that threatened the market and created the irrational exuberance. Greens Congress Relinquishing The Power To Wage War 2 February 1999    1999 Ron Paul 4:72 From December 1996, at the time that Greenspan made this statement, to December 1998, the money supply soared. Over $1 trillion of new money, as measured by M–3, was created by the Federal Reserve. MZM, another monetary measurement, is currently expanding at a rate greater than 20 percent. This generous dose of credit has sparked even more irrational exuberance, which has taken the Dow to over 9,000 for a 30 percent increase in just two years. Greens Congress Relinquishing The Power To Wage War 2 February 1999    1999 Ron Paul 4:73 When the foreign registered corporation long term capital management was threatened in 1998, that is, the market demanding a logical correction to its own exuberance with its massive $1 trillion speculative investment in the derivatives market, Greenspan and company quickly came to its rescue with an even greater acceleration of credit expansion. Greens Introduction of H.R. 1789 18 May 1999    1999 Ron Paul 49:3 Alan Greenspan, now Chairman of the Federal Reserve, described the “world of antitrust” as “reminiscent of Alice’s Wonderland: Everything seemingly is, yet apparently isn’t, simultaneously.” Antitrust is, according to Greenspan “a world in which competition is lauded as the basic axiom and guiding principle, yet, ‘too much’ competition is condemned as ‘cutthroat’. * * * A world in which actions designed to limit competition are branded as criminal when taken by businessmen, yet praised as ‘enlightened’ when initiated by government. A world in which the law is so vague that businessmen have no way of knowing whether specific actions will be declared illegal until they hear the judge’s verdict — after the fact.” And, of course, obscure, incoherent, and vague legislation can make legality unattainable by anyone, or at least unattainable without an unauthorized revision which itself impairs legality. Greens Introduction of H.R. 1789 18 May 1999    1999 Ron Paul 49:9 As argued by Alan Greenspan, “the ultimate regulator of competition in a free economy is the capital market. So long as capital is free to flow, it will tend to seek those areas which offer the maximum rate of return.” Greens Increasing The Minimum Wage Decreases Opportunities For Our Nation’s Youth 10 June 1999    1999 Ron Paul 57:1 Mr. PAUL. Mr. Speaker, I highly recommend Bruce Bartlett’s “Minimum Wage Hikes Help Politicians, Not the Poor”, which recently appeared in The Wall Street Journal, to all of my colleagues. Mr. Bartlett’s article provides an excellent overview of the evidence that an increase in the federally-mandated minimum wage reduces teenage employment. Since those shut out of entry-level work are unlikely to obtain higher-paying jobs in the future, an increase in the minimum wage reduces employment opportunities for millions of Americans. This point was also highlighted by Federal Reserve Chairman Alan Greenspan in testimony before the Senate in January when he pointed out that “All the evidence that I’ve seen suggests that the people who are the most needy of getting on the lower rungs of the ladder of our income scales, develop skills, getting the training, are unable to earn the minimum wage. As a consequence, they cannot get started. And I think we have to be very careful about thinking that we can somehow raise standards of living by mandating an increase in the minimum wage rate.” I hope all of my colleagues will carefully consider how increasing the minimum wage decreases opportunities for our nation’s youth and refrain from reducing economic opportunity for those at the bottom of the economic ladder by raising the minimum wage. Greens Conference Report On S. 900, Gramm-Leach-Bliley Act 4 November 1999    1999 Ron Paul 113:2 With the economy more fragile than is popularly recognized, we should move cautiously as we initiate reforms. Federal Reserve Board Chairman Alan Greenspan (in a 1997 speech in Frankfurt, Germany and other times), Kurt Richebacher, Frank Veneroso and others, have questioned the statistical accuracy of the economy’s vaunted productivity gains. Greens ECONOMIC UPDATE December 4, 2000    2000 Ron Paul 97:23 * Signs of economic slowdown are now all around with the seriously slumping stock market being the most visible and eliciting the most concern. As the slowdown spreads and accelerates the politicians will be anxious to advise the Chairman of the Federal Reserve, Alan Greenspan. Politicians from both sides of the aisle will become deeply and especially concerned when the evidence is clear that the revenues are plummeting and the “surplus” is disappearing. Since this will challenge the ability of the politician to continue the spending spree many will become deeply and vocally concerned. Greens ECONOMIC UPDATE December 4, 2000    2000 Ron Paul 97:24 * The big debate already started in the financial and political circles is when, how much, and how quickly the Federal Reserve should lower interest rates. Indeed all will clamor to lower rates to revive the economy again. With the signs of rising prices in many sectors, especially energy, and in spite of the weak economy we can expect the Federal Reserve chairman to issue precautionary statements. He will reiterate that he must watch out for the resurgence of (price) inflation. In spite of his statements about concerns for inflation, if the stock market slumps and the economic slowdown is significant enough, we can be certain of one thing, the money supply will continue to grow rapidly in an attempt to keep interest rates low. But Mr. Greenspan will never admit that inflating is exactly what he’s been generously doing for the past 13 years. Greens ECONOMIC UPDATE December 4, 2000    2000 Ron Paul 97:25 * A short time after Chairman Greenspan took over the reigns of the Federal Reserve the stock market crash of 1987 prompted him to alleviate concerns with a heavy dose of monetary inflation. Once again, in the slump of 1991 and 1992, he again re-ignited the financial bubble by more monetary inflation. There was no hesitation on Mr. Greenspan’s part to inflate as necessary to alleviate the conditions brought about by the Mexican financial crisis, the Asian crisis, the Russian ruble crisis, and with the Long-Term Capital Management crisis. Just one year ago the non-existent Y2K crisis prompted huge, unprecedented monetary inflation by the Federal Reserve. All these efforts kept interest rates below the market rate and contributed to the financial bubble that is now starting to deflate. But, there is no doubt that this monetary inflation did maintain an economy that seemed like it would never quit growing. Housing markets thrived, the stock market and bond market thrived, and in turn, the great profits made in these areas, especially gains made by stock market transactions, produced profits that inflated greatly the revenues that flowed into the Treasury. The serious problem that we now face, a collapsing stock market and a rapidly weakening economy, was caused by inflating the money supply along with artificially low interest rates. More inflation and continuing the policy of artificially low interest rates can’t possibly be the solution to the dilemma we face. Greens ECONOMIC UPDATE December 4, 2000    2000 Ron Paul 97:27 * Besides, Alan Greenspan knows full well that the scenario we are now experiencing can be made worse by lowering interest rates. Under the conditions we are facing it’s very likely the dollar will weaken and deliberately lowering interest rates will accelerate this trend. Price inflation, which the Fed claims it is so concerned about, will not necessarily go away even with a weak economy. And the one thing we will come to realize that even the best of all central bankers, Alan Greenspan, will not be able to determine interest rates at all times of the business cycle. Inflation premiums, confidence, the value of the dollar, and political conditions all can affect interest rates and these are out of the control of the Federal Reserve Board. Greens ECONOMIC UPDATE December 4, 2000    2000 Ron Paul 97:29 * The question is what should one expect the Federal Reserve Board to eventually do? We can expect it to continue to inflate as they have always chosen with every crisis. There’s no evidence that Alan Greenspan would choose to do anything else regardless of his expression of concern about inflation and the value of the dollar. Greenspan still believes he can control the pain and produce a weakened economy that will not get out of control. But there’s no way that he can guarantee that the United States might not slip into a prolonged lethargy, similar to what Japan is now experiencing. We can be certain that Congress will accommodate with whatever seems to be necessary by bailing out a weakened financial sector. Greens CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001    2001 Ron Paul 7:51 When the recession hits full force, even the extraordinary power and influence of Alan Greenspan and the Federal Reserve, along with all the other central banks of the world, won’t be able to stop the powerful natural economic forces that demand equilibrium. Liquidation of unreasonable debt and the elimination of the over-capacity built into the system and a return to trustworthy money and trustworthy government will be necessary. Quite an undertaking! Greens CHALLENGE TO AMERICA: A CURRENT ASSESSMENT OF OUR REPUBLIC — February 07, 2001    2001 Ron Paul 7:77 Talk of a new era the past five years has had many, including Greenspan, believing that this time it really would be different. And it may indeed be different this time. The correction could be an especially big one, since the Fed-driven distortion of the past 10 years, plus the lingering distortions of previous decades have been massive. The correction could be big enough to challenge all our institutions, the entire welfare state, Social Security, foreign intervention, and our national defense. This will only happen if the dollar is knocked off its pedestal. No one knows if that is going to happen soon or later. But when it does, our constitutional system of government will be challenged to the core. Greens The Economy February 13, 2001    2001 Ron Paul 13:7 Between 1995 and today, the Greenspan Fed increased the money supply as measured by (MZM) by $1.9 trillion or a 65% increase. There is no reason to look any further for the explanation of why the economy is slipping with labor costs rising, energy costs soaring, and medical and education costs skyrocketing, while the stock market is disintegrating. Until we look at the unconstitutional monopoly power the Federal Reserve has over money and credit we can expect a continuation of our problems. Demanding lower interest rates is merely insisting the Federal Reserve deliberately create even more credit, which caused the problem in the first place. We cannot restore soundness to the dollar by debasing the dollar—which is what lowering interest rates is all about—printing more money. Greens The Beginning of the End of Fiat Money March 13, 2001    2001 Ron Paul 18:11 The lynch pin to the outstanding growth of the 1990s has been the US dollar. Although it too is totally fiat, its special status has permitted a bigger bonus to the United States while it has been used to prop up other world economies. The gift bequeathed to us by owning the world reserve currency, allows us to create dollars at will- and Alan Greenspan has not hesitated to accommodate everyone despite his reputation as an inflation fighter. This has dramatically raised our standard of living, and significantly contributed to the new era psychology that has been welcomed by so many naive enough to believe that perpetual prosperity had arrived and the bills would never have to be paid. Greens The Beginning of the End of Fiat Money March 13, 2001    2001 Ron Paul 18:12 One day it will become known that technological advances and improvements in productivity also have a downside. This technology hid the ill effects of the monetary mischief the Fed had enthusiastically engaged in over the past decade. Technological improvements, while keeping the CPI and the PPI prices in check, led many, including Greenspan, to victoriously declare that no inflation existed and that a new era had indeed arrived. Finally, it’s declared that the day has arrived that printing money is equivalent to producing wealth and without a downside. Counterfeiting works! Greens The Beginning of the End of Fiat Money March 13, 2001    2001 Ron Paul 18:23 When that day comes we will have a true New Era, unlike the fictitious New Era of Greenspan’s dreams and certainly opposite of the dangerous New Era that stares us in the face as the world fiat monetary system falters. Greens Manipulation Of Interest Rates Cause Economic Problems 20 March 2001    2001 Ron Paul 22:1 Mr. PAUL. Mr. Speaker, today the Federal Reserve lowered interest rates by a half a percentage point. They have been asked to lower this interest rates by just about everybody in the country. Whether they are investors or politicians, everybody literally has been screaming at the Fed and Alan Greenspan to lower the interest rates, lower the interest rates. Greens Addressing Monetary Problems 22 March 2001    2001 Ron Paul 23:2 Some people claim that they are not quite sure why markets go up and all of a sudden crash; and others say if only Alan Greenspan would just print more money, inflate the currency faster, lower the interest rates, all would be well. But I do not think it is that simple. Greens Addressing Monetary Problems 22 March 2001    2001 Ron Paul 23:4 Only a free market can tell us what interest rates should be or what the money supply should be. But we have become dependent on a Federal Reserve system that pretends to know all these things, and we have allowed Alan Greenspan to believe that he can regulate the entire economy as well as the stock market by the Open Market Committee. Greens The US Dollar and the World Economy September 6, 2001    2001 Ron Paul 75:13 But if the Fed and its chairman, Alan Greenspan, have been able to guide us out of every potential crisis all the way back to the stock market crash of 1987, why shouldn’t we expect the same to happen once again? Mainly because there’s a limit to how long the monetary charade can be perpetuated. Now it looks like the international financial system built on paper money is coming to an end. Greens The US Dollar and the World Economy September 6, 2001    2001 Ron Paul 75:23 Alan Greenspan made a concerted effort to stave off the 1991-1992 recession with numerous reductions in the Fed funds rate to no avail. The recession hit, and most people believe it led to George Bush’s defeat in the 1992 election. It wasn’t that Greenspan didn’t try, and in many ways the Bush people’s criticism of Greenspan’s effort is not justified. Greenspan, the politician, would have liked to please the elder Bush, but was unable to control events as he had wished. This time around, however, he’s been much more aggressive with the half-point cuts along with seven cuts in just eight months, for a total of a three-point cut in the Fed funds rate. But guess what? So far it hasn’t helped. Stocks continue to slide, and the economy is still in the doldrums. It is now safe to say that Greenspan is pushing on a string. In the year 2000, bank loans and commercial paper were growing at an annualized rate of 23%. In less than a year, in spite of this massive influx of new credit, these loans have crashed to a rate of minus 5%. Greens The US Dollar and the World Economy September 6, 2001    2001 Ron Paul 75:46 But we must also reject the notion that one man, Alan Greenspan, or any other chairman of the Federal Reserve Board, can know what the proper money supply and interest rates ought to be- only the market can determine that. This must happen if we ever expect to avoid continuous and deeper recessions and to get the economy growing in a healthy and sustainable fashion. It also must happen if we want to preserve free-market capitalism and personal liberty. Greens Sometimes The Economy Needs A Setback 10 September 2001    2001 Ron Paul 77:9 In markets all things are cyclical, even the idea that markets are not cyclical. The notion that the millennial economy was in some way “new” was an early portent of confusion. Since the dawn of the industrial age, technology has been lightening the burden of work and industrial age, technology has been lightening the burden of work and driving the pace of economic change. In 1850, as the telegraph was beginning to anticipate the Internet, about 65 percent of the American labor force worked on farms. In 2000, only 2.4 percent did. The prolonged migration of hands and minds from the field to the factor, office and classroom is all productivity growth — the same phenomenon the chairman of the Federal Reserve Board rhapsodizes over. It’s true, just as Alan Greenspan says, that technological progress is the bulwark of the modern economy. Then again, it has been true for most of the past 200 years. Greens Sometimes The Economy Needs A Setback 10 September 2001    2001 Ron Paul 77:16 Even moderate expansions produce their share of misconceived investments, and the 90’s boom, the gaudiest on record, was no exception. In the upswing, faith in the American financial leaders bordered on idolatry. Now there is disillusionment. Investors are right to resent Wall Street for its conflicts of interest and to upbraid Alan Greenspan for his wide-eyed embrace of the so-called productivity miracle. But the underlying source of recurring cycles in any economy is the average human being. Greens Introduction of the Monetary Freedom and Accountability Act February 13, 2002    2002 Ron Paul 8:5 GATA has also produced evidence that American officials are involved in gold transactions. Alan Greenspan himself referred to the federal government’s power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: “Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise .” [Emphasis added]. Greens Introduction of the Monetary Freedom and Accountability Act February 13, 2002    2002 Ron Paul 8:20 In December 2000, attorney Reginald H. Howe, a private investor and proprietor of the Website www.goldensextant.com, which reports on gold, filed a lawsuit in the U.S. District Court in Boston. Named as defendants were J.P. Morgan & Co., Chase Manhattan Corp., Citigroup Inc., Goldman Sachs Group Inc., Deutsche Bank, Lawrence Summers (former secretary of the Treasury), William McDonough (president of the Federal Reserve Bank of New York), Alan Greenspan (chairman of the Board of Governors of the Federal Reserve System), and the BIS. Greens Introduction of the Monetary Freedom and Accountability Act February 13, 2002    2002 Ron Paul 8:22 While all the defendants flatly deny participation in such a scheme, Howe’s case is being heard. Howe tells Insight he has provided the court with very compelling evidence to support his claim, including sworn testimony by Greenspan before the House Banking Committee in July 1998. Greenspan assured the committee, “Nor can private counterparties restrict supply of gold, another commodity whose derivatives are often traded over the counter, where central banks stand ready to lease gold in increasing quantities should the price rise.” Howe and other “gold bugs” cite this as a virtual public announcement “that the price of gold had been and would continue to be controlled if necessary.” Greens Introduction of the Monetary Freedom and Accountability Act February 13, 2002    2002 Ron Paul 8:23 According to Howe, “There is a great deal of evidence, but this is a very complicated issue. The key, though, is the short position of the banks and their gold derivatives. The central banks have ‘leased’ gold for low returns to the bullion banks for the purpose of keeping the price of gold low. Greenspan’s remarks in 1998 explain how the price of gold has been suppressed at times when it looked like the price of gold was increasing.” Greens Statement Opposing Military Conscription March 20, 2002    2002 Ron Paul 20:9 President Reagan and Daniel Webster are not the only prominent Americans to oppose conscription. In fact, throughout American history the draft has been opposed by Americans from across the political spectrum, from Henry David Thoreau to Barry Goldwater to Bill Bradley to Jesse Ventura. Organizations opposed to conscription range from the American Civil Liberties Union to the United Methodist Church General Board of Church and Society, and from the National Taxpayers Union to the Conservative Caucus. Other major figures opposing conscription include current Federal Reserve Chairman Alan Greenspan and Nobel Laureate Milton Friedman. Greens Say No to Conscription May 9, 2002    2002 Ron Paul 35:3 Webster was among the first of a long line of prominent Americans, including former President Ronald Reagan and Federal Reserve Chairman Alan Greenspan, to recognize that a draft violates the fundamental principles of liberty this country was founded upon. Greens Has Capitalism Failed? July 9, 2002    2002 Ron Paul 66:7 In the 1930s, it was quite popular to condemn the greed of capitalism, the gold standard, lack of regulation, and a lack government insurance on bank deposits for the disaster. Businessmen became the scapegoat. Changes were made as a result, and the welfare/warfare state was institutionalized. Easy credit became the holy grail of monetary policy, especially under Alan Greenspan, "the ultimate Maestro." Today, despite the presumed protection from these government programs built into the system, we find ourselves in a bigger mess than ever before. The bubble is bigger, the boom lasted longer, and the gold price has been deliberately undermined as an economic signal. Monetary inflation continues at a rate never seen before in a frantic effort to prop up stock prices and continue the housing bubble, while avoiding the consequences that inevitably come from easy credit. This is all done because we are unwilling to acknowledge that current policy is only setting the stage for a huge drop in the value of the dollar. Everyone fears it, but no one wants to deal with it. Greens Free Housing Market Enhancement Act July 16, 2002    2002 Ron Paul 70:7 No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to the GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Greens Hard Questions for Federal Reserve Chairman Greenspan July 17, 2002    2002 Ron Paul 71:1 Rep. Paul: "Welcome Chairman Greenspan. I’ve listened carefully to your testimony but I get the sense I may be listening to the Chairman of the Board of Central Economic planning rather than the chairman of a board that has been entrusted with protecting the value of the dollar. Greens Hard Questions for Federal Reserve Chairman Greenspan July 17, 2002    2002 Ron Paul 71:4 "Now I would like to bring us back to sound money. And I would like to quote an eminent economist by the name of Alan Greenspan who gives me some credibility on what I am interested in. A time ago you said, “In the absence of the gold standard there is no way to protect savings from the confiscation through inflation. There is no safe store of value without gold. 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 that stands as a protector of property rights.’" Greens Hard Questions for Federal Reserve Chairman Greenspan July 17, 2002    2002 Ron Paul 71:5 Congressman Paul then added the he strongly believed this statement by Greenspan taken from a 1966 article that was included in an article he had written titled, "Gold & Economic Freedom" was true. Congressman Paul continued, Greens Hard Questions for Federal Reserve Chairman Greenspan July 17, 2002    2002 Ron Paul 71:9 Chairman Greenspan: "Well first of all, neither we nor the Treasury trade gold. And my impression is that were we to do so, we would announce it. It is certain the case that others do. There are data published monthly or quarterly which shows the reported gold holdings of central banks throughout the world, so you do know who holds what. The actual trading data, ah, I don’t think is available though the London gold exchange does show what its volume numbers are. And periodically, individual central banks do indicate when they are planning to sell gold. But they all report what they own. So it may well be the case that you can’t find specific transactions. I think what you can find is the net result of those transactions and they are published. But so far as the United States is concerned, we don’t do it." Greens 25 July 2002 Monetary Practices    2002 Ron Paul 78:12 Save more, and we get a market process that plays itself out as economic growth. Pump new money through credit markets, and we get a market process of a very different kind: It doesn’t play itself out; it does itself in. The investment binge is followed by a hangover. This is the Austrian theory in a nutshell. (Ironically, it is the theory that Alan Greenspan presented forty years ago when he lectured for the Nathaniel Branden Institute.) We believe that there is strong evidence that the United States is now in the hangover phase of a classic Mises-Hayek business cycle. Greens Abolishing The Federal Reserve 10 September 2002    2002 Ron Paul 86:19 A fixed money stock means that overall prices are generally more stable. The problems of inflation and business cycles disappear entirely. Under the gold standard, in fact, increased market productivity causes prices to generally decline over time as the purchasing power of money increases. In 1967, Alan Greenspan once wrote an article called Gold and Economic Freedom. He wrote that: Greens Abolishing The Federal Reserve 10 September 2002    2002 Ron Paul 86:25 Greenspan now finds himself on the horns of a very serious dilemma. If he continues to pull back on money, the economy could tip into a serious recession. This is especially a danger given rising protectionism, which mirrors the events of the early 1930s. On the other hand, a continuation of the loose policy he has pursued for a year endangers the value of the dollar overseas. Greens Abolishing The Federal Reserve 10 September 2002    2002 Ron Paul 86:26 How much easier matters were when we didn’t have to rely on the wisdom of exalted monetary central planners like Greenspan. Under the gold standard, the supply of money regulated itself. The government kept within limits. Banks were more cautious. Savings were high because credit was tight and saving was rewarded. This approach to economics is the foundation of a sustainable prosperity. Greens Abolishing The Federal Reserve 10 September 2002    2002 Ron Paul 86:28 Is a gold standard feasible again? Of course. The dollar could be redefined in terms of gold. Interest rates would reflect the real supply and demand for credit. We could shut down the Fed and we would never need to worry again what the chairman of the Fed wanted. There was a time when Greenspan was nostalgic for such a system. Investors of the world have come to embrace this view even as Greenspan has completely abandoned it. Greens The Monetary Freedom And Accountability Act 17 July 2003    2003 Ron Paul 79:5 GATA has also produced evidence that American officials are involved in gold transactions. Alan Greenspan himself referred to the federal government’s power to manipulate the price of gold at hearings before the House Banking Committee and the Senate Agricultural Committee in July, 1998: “Nor can private counterparts restrict supplies of gold, another commodity whose derivatives are often traded over-the-counter, where central banks stand ready to lease gold in increasing quantities should the price rise.”. Greens Bring Back Honest Money 17 July 2003    2003 Ron Paul 82:3 While fiat money is widely accepted thanks to legal tender laws, it does not maintain its purchasing power. This works to the disadvantage of ordinary people who lose the purchasing power of their savings, pensions, annuities, and other promises of future payment. Most importantly, because of the subsidies our present monetary system provides to banks, which, as Federal Reserve Chairman Alan Greenspan has stated, “induces” the financial sector to increase leverage, the Federal Reserve can create additional money, in Mr. Greenspan’s words, “ without limit .” For this reason, absent legal tender laws, many citizens would refuse to accept fiat irredeemable paper-ticket or electronic money. Greens Paper Money and Tyranny September 5, 2003    2003 Ron Paul 93:2 Alan Greenspan, years before he became Federal Reserve Board Chairman in charge of flagrantly debasing the U.S. dollar, wrote about this connection between sound money, prosperity, and freedom. In his article “Gold and Economic Freedom” ( The Objectivist, July 1966), Greenspan starts by saying: “An almost hysterical antagonism toward the gold standard is an issue that unites statists of all persuasions. They seem to sense…that gold and economic freedom are inseparable.” Further he states that: “Under the gold standard, a free banking system stands as the protector of an economy’s stability and balanced growth.” Astoundingly, Mr. Greenspan’s analysis of the 1929 market crash, and how the Fed precipitated the crisis, directly parallels current conditions we are experiencing under his management of the Fed. Greenspan explains: “The excess credit which the Fed pumped into the economy spilled over into the stock market- triggering a fantastic speculative boom.” And, “…By 1929 the speculative imbalances had become overwhelming and unmanageable by the Fed.” Greenspan concluded his article by stating: “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.” He explains that the “shabby secret” of the proponents of big government and paper money is that deficit spending is simply nothing more than a “scheme for the hidden confiscation of wealth.” Yet here we are today with a purely fiat monetary system, managed almost exclusively by Alan Greenspan, who once so correctly denounced the Fed’s role in the Depression while recognizing the need for sound money. Greens Paper Money and Tyranny September 5, 2003    2003 Ron Paul 93:4 If honest money and freedom are inseparable, as Mr. Greenspan argued, and paper money leads to tyranny, one must wonder why it’s so popular with economists, the business community, bankers, and our government officials. The simplest explanation is that it’s a human trait to always seek the comforts of wealth with the least amount of effort. This desire is quite positive when it inspires hard work and innovation in a capitalist society. Productivity is improved and the standard of living goes up for everyone. This process has permitted the poorest in today’s capitalist countries to enjoy luxuries never available to the royalty of old. Greens Paper Money and Tyranny September 5, 2003    2003 Ron Paul 93:42 Though generally accepted by most modern economists and politicians, there is little hesitancy in accepting the omnipotent wisdom of the Federal Reserve to know the “price” of money – the interest rate – and its proper supply. For decades, and especially during the 1990s – when Chairman Greenspan was held in such high esteem, and no one dared question his judgment or the wisdom of the system- this process was allowed to run unimpeded by political or market restraints. Just as we must eventually pay for our perpetual deficits, continuous manipulation of interest and credit will also extract a payment. Greens Paper Money and Tyranny September 5, 2003    2003 Ron Paul 93:44 Our current monetary system makes it tempting for all parties, individuals, corporations, and government to go into debt. It encourages consumption over investment and production. Incentives to save are diminished by the Fed’s making new credit available to everyone and keeping interest rates on saving so low that few find it advisable to save for a rainy day. This is made worse by taxing interest earned on savings. It plays havoc with those who do save and want to live off their interest. The artificial rates may be 4, 5, or even 6% below the market rate, and the savers- many who are elderly and on fixed incomes- suffer unfairly at the hands of Alan Greenspan, who believes that resorting to money creation will solve our problems and give us perpetual prosperity. Greens Paper Money and Tyranny September 5, 2003    2003 Ron Paul 93:68 Alan Greenspan, although once a strong advocate for the gold standard, now believes he knows what the outcome of this battle will be. Is it just wishful thinking on his part? In an answer to a question I asked before the Financial Services Committee in February 2003, Chairman Greenspan made an effort to convince me that paper money now works as well as gold: “I have been quite surprised, and I must say pleased, by the fact that central banks have been able to effectively simulate many of the characteristics of the gold standard by constraining the degree of finance in a manner which effectively brought down the general price levels.” Earlier, in December 2002, Mr. Greenspan spoke before the Economic Club of New York and addressed the same subject: “The record of the past 20 years appears to underscore the observation that, although pressures for excess issuance of fiat money are chronic, a prudent monetary policy maintained over a protracted period of time can contain the forces of inflation.” There are several problems with this optimistic assessment. First, efficient central bankers will never replace the invisible hand of a commodity monetary standard. Second, using government price indexes to measure the success of a managed fiat currency should not be reassuring. These indexes can be arbitrarily altered to imply a successful monetary policy. Also, price increases of consumer goods are not a litmus test for measuring the harm done by the money managers at the Fed. The development of overcapacity, excessive debt, and speculation still occur, even when prices happen to remain reasonably stable due to increases in productivity and technology. Chairman Greenspan makes his argument because he hopes he’s right that sound money is no longer necessary, and also because it’s an excuse to keep the inflation of the money supply going for as long as possible, hoping a miracle will restore sound growth to the economy. But that’s only a dream. Greens Fannie Mae and Freddie Mac Subsidies Distort the Housing Market September 10, 2003    2003 Ron Paul 95:9 No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that government subsidies provided to GSEs make investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Greens Introducing Free Housing Market Enhancement Act 10 September 2003    2003 Ron Paul 96:8 No less an authority than Federal Reserve Chairman Alan Greenspan has expressed concern that the government subsidies provided to the GSEs make investors underestimate the risk of investing in Fannie Mac and Freddie Mac. Greens A Wise Consistency February 11, 2004    2004 Ron Paul 2:13 Paper Money, Inflation, and Economic Pain : Paper money and inflation have never provided long-term economic growth, nor have they enhanced freedom. Yet the world, led by the United States, lives with a financial system awash with fiat currencies and historic debt as a consequence. No matter how serious the problems that come from central-bank monetary inflations — the depressions and inflation, unemployment, social chaos, and war — the only answer has been to inflate even more. Except for the Austrian free-market economists, the consensus is that the Great Depression was prolonged and exacerbated by the lack of monetary inflation. This view is held by Alan Greenspan, and reflected in his January 2001 response to the stock market slump and a slower economy — namely a record monetary stimulus and historically low interest rates. The unwillingness to blame the slumps on the Federal Reserve’s previous errors, though the evidence is clear, guarantees that greater problems for the United States and the world economy lie ahead. Though there is adequate information to understand the real cause of the business cycle, the truth and proper policy are not palatable. Closing down the engine of inflation at any point does cause short-term problems that are politically unacceptable. But the alternative is worse, in the long term. It is not unlike a drug addict demanding and getting a fix in order to avoid the withdrawal symptoms. Not getting rid of the addiction is a deadly mistake. While resorting to continued monetary stimulus through credit creation delays the pain and suffering, it inevitably makes the problems much worse. Debt continues to build in all areas — personal, business, and government. Inflated stock prices are propped up, waiting for another collapse. Mal-investment and overcapacity fail to correct. Insolvency proliferates without liquidation. These same errors have been prolonging the correction in Japan for 14 years, with billions of dollars of non-performing loans still on the books. Failure to admit and recognize that fiat money, mismanaged by central banks, gives us most of our economic problems, along with a greater likelihood for war, means we never learn from our mistakes. Our consistent response is to inflate faster and borrow more, which each downturn requires, to keep the economy afloat. Talk about a foolish consistency! It’s time for our leaders to admit the error of their ways, consider the wise consistency of following the advice of our Founders, and reject paper money and central bank inflationary policies. Greens Government Sponsored Enterprises 26 October 2005    2005 Ron Paul 108:5 Federal Reserve Chairman Alan Greenspan has expressed concern that the government subsidies provided to the GSEs makes investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Although he has endorsed many of the regulatory “solutions” being considered here today, Chairman Greenspan has implicitly admitted the subsidies are the true source of the problems with Fannie and Freddie. Greens Amendment No. 6 Offered By Mr. Paul — Part 1 26 October 2005    2005 Ron Paul 109:4 I think Members can see there is a problem with our GSEs. The debt is horrendous. Today, the administration sent a letter around and said that the debt of the GSEs totals $2.5 trillion, and they also guarantee in addition $2.4 trillion. That adds up to more money than the Federal Government has borrowed. So it is a tremendous amount of money and credit that is in the system; and people have become frightened about this, including chairman of the Federal Reserve Board, Alan Greenspan. Greens The End Of Dollar Hegemony 15 February 2006    2006 Ron Paul 3:29 Federal Chairman Alan Greenspan, on several occasions before the House Banking Committee, answered my challenges to him about his previously held favorable views on gold by claiming that he and other central bankers had gotten paper money, that is the dollar system, to respond as if it were gold. Each time I strongly disagreed and pointed out that if they had achieved such a feat they would have defied centuries of economic history regarding the need for money to be something of real value. He smugly and confidently concurred with this. Greens The End Of Dollar Hegemony 15 February 2006    2006 Ron Paul 3:39 Greenspan, in his first speech after leaving the Fed, said that gold prices were up because of concern about terrorism and not because of monetary concerns or because he created too many dollars during his tenure. Gold has to be discredited and the dollar propped up. Even when the dollar comes under serious attack by market forces, the central banks and the IMF will surely do everything conceivable to soak up the dollars in hope of restoring stability. Eventually, they will fail. Greens Gold And The U.S. Dollar 25 April 2006    2006 Ron Paul 23:13 Not only that, paper money has worked surprisingly well in the past 35 years, the years the world has accepted pure paper money as currency. Alan Greenspan bragged that central bankers in these decades have gained the knowledge necessary to make paper money respond as if it were gold. Greens Milton Friedman 6 December 2006    2006 Ron Paul 100:27 Friedman’s speed at signing made it much easier, I’m sure, to get the signatures of almost 300 other prominent and not-so-prominent economists, including Kenneth Boulding, Harold Demsetz, David Friedman, Alan Greenspan, Donald McCloskey, William Meckling, Allen H. Meltzer, James C. Miller III, William A. Niskanen, Mancur Olson, Sam Peltzman, Murray Rothbard, Jeremy J. Siegel, Vernon Smith, Beryl W. Sprinkel, Jerome Stein, and James L. Sweeney. Greens Federal Housing Finance Reform Act Of 2007 17 May 2007    2007 Ron Paul 52:5 Federal Reserve Chairman Alan Greenspan has expressed concern that the government subsidies provided to the GSEs makes investors underestimate the risk of investing in Fannie Mae and Freddie Mac. Although he has endorsed many of the regulatory “solutions” being considered here today, Chairman Greenspan has implicitly admitted the subsidies are the true source of the problems with Fannie and Freddie. Greens Statement before the Financial Services Committee 20 September 2007    2007 Ron Paul 93:4 Reduction in the interest rate has two major effects: it encourages consumption over saving; and it makes long-term, capital-intensive projects cheaper to undertake. Under Chairman Greenspan's tenure, the federal funds rate was so low that the real interest rate (that is the nominal interest rate minus inflation) was negative. With a negative real interest rate, someone who saves money will literally lose the value of that money. Greens Statement: “Something Big is Happening” 9 July 2008    2008 Ron Paul 42:19 This time — since there are so many dollars and so many countries involved — the Fed has been able to “paper” over every approaching crisis for the past 15 years, especially with Alan Greenspan as Chairman of the Federal Reserve Board, which has allowed the bubble to become history’s greatest. Greens Humphrey Hawkins Hearing on Monetary Policy July 16, 2008    2008 Ron Paul 46:2 The two GSE’s have been disasters waiting to happen, as I and many others have warned over the years. It was bad enough that Fannie and Freddie were able to operate with significant advantages, such as lower borrowing costs and designation of their debt as government debt. Now, the implicit government backstop has turned out to be an explicit backstop, just as we feared. The Greenspan reflation of the economy after the dot-com bust pumped additional liquidity into an already-skewed housing market, leading to an unsustainable boom that from many accounts has only begun to unravel. With a current federal funds rate of two percent, and inflation at over four percent, the Fed is currently sowing the seeds for another economic bubble. Texas Straight Talk Greens A New Pandora's Box 25 January 1999    Texas Straight Talk 25 January 1999 verse 14 ... Cached While Federal Reserve chairman Alan Greenspan and I are often at odds on issues of monetary policy, he perhaps best described the president's plan. "Let me just say it's not so much a trade-off of benefits versus costs. I'm frankly just hard-pressed to find any benefits there are in doing it." Greens A New Pandora's Box 25 January 1999    Texas Straight Talk 25 January 1999 verse 15 ... Cached Such plans not only bode wretched possibilities for the nation and economy in general, but are also harmful to the individual. Mr. Greenspan has pointed out, correctly, that some state government's already have pension plans for their employees, and that these accounts have an average return two percent or worse than privately run accounts. Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 2 ... Cached Greenspan Nominated to a Fourth Term Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 4 ... Cached President Clinton's nomination of Alan Greenspan to a fourth term as Federal Reserve Board Chairman has been met with nearly unanimous praise. From Congressional leaders to Wall Street gurus, the announcement brought a sigh of relief that good times will continue. The only reservation I noticed was written by economist Mark Weisbrot, who worried that Greenspan might not inflate the currency fast enough. Otherwise, everyone seemed delighted with the nomination. Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 5 ... Cached Essentially, no one in Washington, on Wall Street, or in the financial media challenges the inflationary policy of the Fed, believing that the favorable status quo will continue indefinitely as long as the money wizard stays in charge. In good times it's easy to forget severe recessions and commodity price inflation. Today, just about everyone endorses the New Era in prosperity that technology and Alan Greenspan have delivered to us. Inflation, as defined by a rising CPI, has been declared dead. Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 7 ... Cached Many are delighted that Greenspan will stay in charge, believing he can prevent an economic turndown with proper monetary management. Sorry, but it's too late. The distortions are already in place, and because the most recent economic cycle has lasted longer than usual, it means there's been more credit creation and distortion than usual. Therefore a bigger downturn will result. The only policy available to the Fed today is to further inflate the currency in an attempt to delay the inevitable correction. Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 8 ... Cached Greenspan has already supervised one serious recession in the early 1990s. No matter how astute a chairman of the Federal Reserve Board is, it's impossible to avoid recessions when managing a fiat monetary system. Alan Greenspan has been quite generous when it comes to creating new money. Since 1987 when Greenspan took over, high-powered money, as measured by the monetary base, has increased by 138%. This has resulted in an increase of nearly $3 trillion of bank deposits as measured by M3. This new money creation keeps interest rates lower than they otherwise would be, making the banks and Wall Street happy. It also pleases the spendthrift politicians who during Greenspan's term have increased the national debt by $32 trillion. Almost the entire increase in the national debt since 1987 has been monetized or paid for by Greenspan printing new money. Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 10 ... Cached Every time the market in the past three years threatened to bring on a correction, Chairman Greenspan rushed to the rescue - to the delight of everyone in Washington and New York - with a massive influx of new money and lower rates. In 1997 the excuse was the Asian crisis; in 1998 it was the failure of Long Term Capital Management; and in 1999 it was the potential Y2K crisis. In the past 3 months, bank credit has increased at a greater than 30% annual rate. Greenspan, in this past quarter, may have talked about "tight money" and even raised overnight rates, but he was quite active inflating the currency. Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 14 ... Cached Alan Greenspan was at one time a free market adherent and gold standard advocate. Read what he had to say about the Federal Reserve Board policy of the 1920s and the subsequent depression. The experts in the 20s had also declared a New Era economic growth without price inflation resulting from technological advances and wise monetary management. Greenspan explains: "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 constant demoralizing of business confidence." (Gold and Economic Freedom, 1966) Greens Greenspan Nominated to a Fourth Term 17 January 2000    Texas Straight Talk 17 January 2000 verse 15 ... Cached Maybe Alan Greenspan has been at the Fed too long. It seems he now believes in his own greatness. He should read his own analysis, decline the nomination, and hope the next chairman gets blamed for the correction already built into the system. Greens Sound Money Needed More Than Ever 28 February 2000    Texas Straight Talk 28 February 2000 verse 3 ... Cached Greenspan Admits Fed Flaw in Testimony Greens Sound Money Needed More Than Ever 28 February 2000    Texas Straight Talk 28 February 2000 verse 4 ... Cached I have got to hand it to Alan Greenspan. Testifying last week before the House Banking Committee, he sounded so authoritative that my colleague Mel Watt from North Carolina said that he could not even understand the things Greenspan says. Mr. Watt attributed his lack of understanding not to some deficiency in Greenspan's communicative capabilities but rather to Watts' self-professed lack of understanding. Yes, it does seem that Greenspan can convince many, including some here in Congress, that up is down and vice versa. Greens Sound Money Needed More Than Ever 28 February 2000    Texas Straight Talk 28 February 2000 verse 5 ... Cached For my part, I was intrigued by an admission that Greenspan made to my direct questions put to him. After I pressed him for an explanation of what he considered the best tool to measure the money supply, Greenspan plainly admitted that he was at a loss for picking out what such a measure might be. When I suggested that it must be difficult to manage something you cannot even define, he not only agreed with me but said it was (and this is Mr. Greenspan's word) "impossible" to manage something you could not define. Greens Sound Money Needed More Than Ever 28 February 2000    Texas Straight Talk 28 February 2000 verse 6 ... Cached This is in fact an obvious truth but at the same time a startling admission from our nation's leading maker of monetary policy. Of course, one thing of which Greenspan is quite aware due to his familiarity with the economics of sound money, is the fact that the creation of units of monetary exchange out of thin air will lead to a recession. Greens Sound Money Needed More Than Ever 28 February 2000    Texas Straight Talk 28 February 2000 verse 7 ... Cached In addition to Greenspan's admission regarding the difficulty of a centrally managed money supply there is a darker problem to which he is far less likely to own up. That is the fact that centrally planned monetary policy is open to political pressures as well. For years Chairman Greenspan had been concerned about the over-expansion of the money supply, dating back at least to his "irrational exuberance" statements. So why did Greenspan not begin the monetary tightening that he now counsels at a much earlier period? Greens Sound Money Needed More Than Ever 28 February 2000    Texas Straight Talk 28 February 2000 verse 9 ... Cached So, as the President faced a stiff challenge that could threaten the very existence of his Presidency, Mr. Greenspan kept the money flowing and the good times rolling, even as he was speaking the rhetoric of increased concern for the economy. Now if anybody is surprised that the future of our US economy would be subjected to political manipulation to assist a troubled President you ought not to be. Indeed it is the history of the Fed to be responsive to certain political needs of, and pressures from, the political power brokers who have influence over the appointment and confirmation of Fed board members, including the Fed chair. Nobody who has seriously considered Fed action in light of election-year politics and troubled political leaders could argue with a straight face that the one does not directly affect the other. Greens Sound Money Needed More Than Ever 28 February 2000    Texas Straight Talk 28 February 2000 verse 10 ... Cached The bottom line is that Greenspan's admission suggests that, even without the negative affects of political considerations, a fiat monetary policy is doomed to fail. When we add to the mix the all-too-human tendency of central planners responding to political pressure, as Greenspan and the fed money making machine clearly did throughout the impeachment process, what we have is a recipe for disaster. Unfortunately, Greenspan's admission points anew to the fact that a big mess is coming. But fortunately for those who are listening, it also presents proof-positive that the best way to avoid such calamities in the future is to reset our monetary policy on a firm and sound basis. Greens The Fed Cannot Create Prosperity 03 September 2001    Texas Straight Talk 03 September 2001 verse 3 ... Cached Last week Federal Reserve chairman Alan Greenspan discussed the state of the US economy during a conference held in Wyoming. He was quite candid in his admission that the economic outlook remains gloomy, especially given the sobering numbers recently released in the media. Economic growth, measured by GDP, has fallen to .2%, the lowest in 8 years- meaning the economy is nearly in a recession. The Dow and Nasdaq averages suffered losses throughout August. Consumer spending, supposedly the one bright spot in the outlook, is also wavering. American families undoubtedly know first-hand that the job market is very shaky, and it was only a matter of time until purchases of new houses, cars, and retail goods declined. A tumble in the real estate markets may be the last straw that sends the economy into a tailspin. Greens The Fed Cannot Create Prosperity 03 September 2001    Texas Straight Talk 03 September 2001 verse 4 ... Cached All of these economic problems have developed despite the massive interest rate- cutting measure taken by the Fed over the past two years. Chairman Greenspan has cut interest rates 7 times in 2001 alone, most recently in mid-August. However, the markets have not responded, and Wall Street continues to pressure the Fed to reduce rates even more. This trend developed steadily throughout the 1990's- each time the economy showed signs of a downturn, the Fed cut rates. Yet it is becoming apparent that this practice cannot work forever, and that every short-term fix simply puts off the inevitable painful correction that must follow. Greens The Fed Cannot Create Prosperity 03 September 2001    Texas Straight Talk 03 September 2001 verse 6 ... Cached Still, while some in America have begun to challenge the wisdom of Alan Greenspan, few seem to question the concept of the Fed bank itself. In fact, the financial and political press never discuss the dangers of a fiat currency system managed by a centralized bank. Remember, every time the Fed cuts interest rates, it expands the amount of money in the economy. Economists have a simple word for this increase in the money supply: inflation. Inflation means your money has less buying power and your retirement savings are worth less. Yet we never hear the Fed criticized for its inflationary measures- on the contrary, Greenspan was widely praised throughout the 1990s as the all-knowing sage responsible for the good times. Greens The Truth about Government Debt 11 March 2002    Texas Straight Talk 11 March 2002 verse 6 ... Cached Federal Reserve chairman Greenspan recently endorsed a political trick to make the debt seem smaller simply by redefining those IOUs. The current law treats certain government obligations such as Social Security payments and veteran pensions as debts, meaning they must be included within the permitted debt ceiling. Of course they are debts, just like any other bill that will have to be paid in the future. Greenspan would have us redefine these obligations as "intergovernment accounts," which magically changes them from debts to "accrued liabilities." This semantic shift would free up lots of room under the debt ceiling for more borrowing. Congress could even use this approach to lower the ceiling and claim a victory for fiscal responsibility while still borrowing more! The reality, of course, is that those old debts will still exist, but we won't have to think about them for a few more years. Greens The 2003 Spending Orgy 03 March 2003    Texas Straight Talk 03 March 2003 verse 6 ... Cached Meanwhile, Federal Reserve Chairman Greenspan recently suggested before a congressional committee that billions could be saved if the Treasury used lower inflation estimates. In other words, if we say inflation is lower than the Consumer Price Index and other barometers indicate, Congress won’t have to spend as much on cost-of-living adjustments for programs like Social Security. This amounts to lying to the American people about our monetary policies, by hiding the true rate of inflation caused by printing too many dollars and keeping interest rates artificially low. Greens The Federal Debt Spiral 02 June 2003    Texas Straight Talk 02 June 2003 verse 6 ... Cached The House managed to avoid a direct vote on raising the debt limit, instead burying a series of automatic debt increases in the terrible 2004 budget passed in April. The Senate, by contrast, at least held an up-or-down vote on the issue. Yet only one Republican Senator voted against saddling the American people with nearly another trillion dollars of debt. Both parties in Congress clearly now view the debt ceiling law as purely symbolic at best. Privately, most members probably view it as an unnecessary obstacle that should be eliminated, an opinion shared by Federal Reserve Chairman Greenspan. Greens Declining Dollar, Declining Fortunes 23 June 2003    Texas Straight Talk 23 June 2003 verse 2 ... Cached I recently had an opportunity to hear testimony by Federal Reserve Chairman Alan Greenspan at a hearing of the Joint Economic committee. I always relish the opportunity to question Mr. Greenspan at such hearings, because I disagree so strongly with Fed policies. Mr. Greenspan is a remarkable man, with a background as a devotee of novelist Ayn Rand, a supporter of the gold standard, and a fervent advocate of capitalism. So I’m at a loss to explain his metamorphosis into a believer in fiat currency and centralized economic planning. Greens Declining Dollar, Declining Fortunes 23 June 2003    Texas Straight Talk 23 June 2003 verse 4 ... Cached Mr. Greenspan declined to answer my question about the tumbling value of the dollar, citing a kind of gentlemen’s agreement between him and the Treasury department not to discuss dollar policy. This is preposterous, of course, because he is unquestionably the one man on earth most responsible for the value of the U.S. dollar. If a member of Congress cannot ask the Federal Reserve Chairman a straightforward question about dollar policy, how can we expect the American public to have the faintest idea about what the Fed really does? The answer is that very few Americans pay any attention to the Fed, which has successfully insulated itself as a “nonpolitical” entity. Greens Declining Dollar, Declining Fortunes 23 June 2003    Texas Straight Talk 23 June 2003 verse 5 ... Cached Mr. Greenspan’s two greatest sins are easy to understand. First, he has wildly inflated the money supply by creating more than $5 trillion in new dollars since he became Fed chairman. Second, he has relentlessly cut interest rates below market levels. These actions make money too plentiful and too cheap. When dollars are abundant and the cost of borrowing is low, people and businesses spend money less carefully. The stock market bubble of the late 1990s is all the proof we need that Fed printing presses can create money, but not wealth. Greens Declining Dollar, Declining Fortunes 23 June 2003    Texas Straight Talk 23 June 2003 verse 8 ... Cached Mr. Greenspan certainly basked in the glow of admiration during the 1990s, when money and credit seemed limitless. He was deemed a genius by both the financial press and a general public eager to let the good times roll. Even today, with the nation mired in the inevitable bust following the Fed’s artificially-created boom, his detractors are few. In fact, President Bush plans to offer Mr. Greenspan another term as Fed chief. If our economic woes continue, however, the nation someday may regret not taking a closer look at the Federal Reserve and its manipulation of our financial fortunes. Greens Federal Reserve Inflation Punishes Saving 21 July 2003    Texas Straight Talk 21 July 2003 verse 2 ... Cached During testimony before the House Financial Services committee last week, Federal Reserve Chairman Alan Greenspan indicated that he is prepared to maintain low interest rates for “as long as it takes” to energize the listless economy. Unfortunately, this will only prolong the painful economic consequences of his own easy money, easy credit policies. Greens Federal Reserve Inflation Punishes Saving 21 July 2003    Texas Straight Talk 21 July 2003 verse 3 ... Cached Throughout Greenspan’s tenure, we’ve been told that inflation is either nonexistent or very much in check. The Treasury department assures us that consumer prices, measured by the consumer price index (CPI), are under control. But inflation is much greater than the government admits. The CPI excludes housing prices, among other things. Everyone knows that housing prices have risen dramatically over the last decade in most parts of the country, with rents following closely behind. So the single biggest expense for most Americans- their mortgage or rent payment- certainly has inflated! The price of many other goods and services, including medical care and energy, also has risen substantially. Greens Federal Reserve Inflation Punishes Saving 21 July 2003    Texas Straight Talk 21 July 2003 verse 4 ... Cached The real measure of inflation is the increase in the money supply. Chairman Greenspan, through his relentless cutting of interest rates, has made it possible for banks to flood the worldwide economy with dollars. In fact the money supply, as measured by a figure economists call M3, has nearly doubled since 1996. Greens Federal Reserve Inflation Punishes Saving 21 July 2003    Texas Straight Talk 21 July 2003 verse 7 ... Cached Mr. Greenspan once again discussed his concerns about deflation during the hearing. This is ironic not only because he has caused so much inflation, but also because deflation used to be viewed as mostly a good thing. In most cases, falling prices result from better technology, increased productivity, and price competition. I doubt many older people would complain about a drop in the price of groceries, gas, or utilities! Greens Federal Reserve Inflation Punishes Saving 21 July 2003    Texas Straight Talk 21 July 2003 verse 8 ... Cached Yet even as the Chairman warned about the supposed danger of deflation, he also discussed his view that rising natural gas prices pose a serious threat to the U.S. economy. There seems to be no coherent message coming from Mr. Greenspan: we’re warned about “irrational exuberance” even as the Fed cuts interest rates and wildly inflates the money supply; we’re told there is no inflation, yet housing prices skyrocket; we’re told that only our central bank planners have the wisdom to determine proper monetary policies, yet the Chairman himself seems to equivocate constantly and provide only the fuzziest answers to straightforward questions. Greens Federal Reserve Inflation Punishes Saving 21 July 2003    Texas Straight Talk 21 July 2003 verse 9 ... Cached Centralized planning is as disastrous in monetary affairs as in economic affairs. Just as Russian commissars could not determine prices or production levels in the absence of a free market, the Federal Reserve Board cannot determine the “proper” level for interest rates or the money supply. Our fiat currency and artificially low interest rates can only result in the deterioration of the U.S. dollar through inflation, which in the end will cause interest rates to rise no matter what the Fed says or does. Older Americans especially stand to suffer most from Mr. Greenspan’s easy money policies. Greens The Tyranny of Paper Money 08 September 2003    Texas Straight Talk 08 September 2003 verse 2 ... Cached In an article entitled “Gold and Economic Freedom,” Federal Reserve Chairman Alan Greenspan wrote that “The excess credit which the Fed pumped into the economy spilled over into the stock market- triggering a fantastic speculative boom…The speculative imbalances had become overwhelming and unmanageable by the Fed… In the absence of the gold standard, there is no way to protect savings from confiscation through inflation.” The irony is that Mr. Greenspan’s words, written in 1966 to describe the era leading up to the Great Depression, could easily have been written in 2003 to describe the consequences of his own Fed policies during the 1990s. Greens The Tyranny of Paper Money 08 September 2003    Texas Straight Talk 08 September 2003 verse 3 ... Cached Mr. Greenspan once understood that a fiat money system represents nothing more than a sinister and evil form of hidden taxation. When the government can print money at will, it’s morally identical to the counterfeiter who illegally prints currency. Fiat money polices especially hurt savers and those on fixed incomes, who find the value of their dollars steadily eroded by the Fed’s printing presses. Greens The Disappearing Dollar 08 December 2003    Texas Straight Talk 08 December 2003 verse 2 ... Cached Those who follow financial markets may be familiar with the term “strong-dollar policy,” which is used by Bush administration officials and Federal Reserve Chairman Alan Greenspan himself. One might assume that such a policy entailed a course of action designed to strengthen the value of the U.S. dollar. However, if we judge Fed policy by Mr. Greenspan’s actions rather than his words, it appears we have a weak-dollar policy, a policy that erodes the value of your personal savings. The “strong-dollar policy” is nothing more than an empty political slogan. Greens The Disappearing Dollar 08 December 2003    Texas Straight Talk 08 December 2003 verse 3 ... Cached The inescapable truth is that the value of the U.S. dollar has fallen over 30% in the past year, which to most people would not seem indicative of strength. There are several reasons for this decline, but the single biggest factor has been Mr. Greenspan’s relentless increase of the money supply. There are roughly sixteen trillion dollars in worldwide use today, five trillion more than when Greenspan became Fed chair. The law of supply is immutable: When dollars are abundant they are also cheap. Greens Greenspan's Black Magic 23 February 2004    Texas Straight Talk 23 February 2004 verse 1 ... Cached Greenspan’s Black Magic Greens Greenspan's Black Magic 23 February 2004    Texas Straight Talk 23 February 2004 verse 2 ... Cached In testimony before the House Financial Services Committee last week, Federal Reserve Chairman Alan Greenspan painted a rosy picture of the U.S. economy. In his eyes, the Fed’s aggressive expansion of the money supply and suppression of interest rates have strengthened the financial condition of American households and industries. If this is true, however, our nation’s "prosperity" is merely a temporary illusion based on smoke and mirrors. True wealth cannot be created simply by printing money; families and businesses cannot prosper by getting deeper in debt. Greens Greenspan's Black Magic 23 February 2004    Texas Straight Talk 23 February 2004 verse 3 ... Cached In fact, Economist Frank Shostak of the Ludwig von Mises Institute throws cold water on Chairman Greenspan’s assertions in an article entitled "Running on Empty." Mr. Shostak cites statistics showing that American families have never been deeper in debt, never saved so little, and never consumed so much more than they produce. By any objective standard, U.S. families are treading on very shaky economic ground. Greens Greenspan's Black Magic 23 February 2004    Texas Straight Talk 23 February 2004 verse 4 ... Cached Never mind, says Mr. Greenspan. Mortgage refinancing, made wildly popular by artificially low interest rates established by the Fed, will be the saving grace of American households. They can simply borrow against their homes to finance living beyond their means, a practice encouraged by Fed policies. But what happens when home prices stop going up? What happens when families reach a point where they cannot make payments on two, three, or even more mortgages? How can the Fed chairman equate mortgage credit with real economic growth? Greens Greenspan's Black Magic 23 February 2004    Texas Straight Talk 23 February 2004 verse 5 ... Cached Mr. Shostak also demonstrates that American businesses aren’t doing much better. As consumers exhaust their ability to borrow, they necessarily buy fewer goods and services. The ratio of business liabilities to assets is very high, price to earning ratios are still unrealistic, and investment capital remains scarce. Business may be better than it was two years ago, but the fundamentals are far less healthy than Mr. Greenspan would have us believe. Greens Greenspan's Black Magic 23 February 2004    Texas Straight Talk 23 February 2004 verse 6 ... Cached Debt is the fundamental problem the central planners at the Fed will not address. The total U.S. federal debt is more than $7 trillion, and government spending as a percentage of gross domestic product has never been higher except during World War II. Mr. Greenspan’s attempts to stimulate economic growth by printing money become more and more tenuous: today the Fed must create nearly $7 of new debt in the form of new fiat currency to generate only $1 of new GDP. Twenty years ago the figure was less than $1.50. Clearly this is a race that has run its course. Greens Greenspan's Black Magic 23 February 2004    Texas Straight Talk 23 February 2004 verse 8 ... Cached The end may come when foreign central banks realize the dollars they receive are worthless, or when they find other places to turn for income. When that day comes, interest rates will rise, perhaps dramatically. At that point not even Mr. Greenspan will be able to save the economy from the painful correction necessitated by his easy credit, easy money policies. Greens Inflation- Alive and Well 08 March 2004    Texas Straight Talk 08 March 2004 verse 2 ... Cached For years, the central planners at the Federal Reserve have assured us that inflation is dormant, if not dead. Federal Reserve Governor Ben Bernanke, during a recent speech in Washington, took pains to emphasize that inflation is “Under very good control.” But considering the relentless increase in the money supply engineered by the Fed over the last decade, one wonders whether Mr. Bernanke, Chairman Greenspan, and company protest too much. Greens Inflation- Alive and Well 08 March 2004    Texas Straight Talk 08 March 2004 verse 3 ... Cached Austrian- school economists demonstrate that true inflation is monetary inflation. True inflation therefore can be measured by an increase in the money supply. Mr. Greenspan and Fed policy makers have more than doubled the M3 money supply in less than ten years. While Treasury printing presses can print unlimited dollars, there are natural limits to economic growth. This flood of newly minted US currency can only increase consumer prices in the long term, as more and more dollars chase available goods and services. Greens Inflation- Alive and Well 08 March 2004    Texas Straight Talk 08 March 2004 verse 7 ... Cached The prices of many other goods and services, including medical care and energy, also have increased substantially in the past decade. Commodity prices in particular have risen recently. In fact, broad indexes show commodities have risen 49% since last spring! The price of gold, steel, lumber, coal, lead, soybeans, corn, and rice have all spiked over the past year. When raw materials and basic consumables rise in price, all of us feel the effects in our pocketbooks. Mr. Greenspan may dismiss commodities as mere “physical” assets in his vision of an increasingly “conceptual” economy, but the markets are showing their preference for hard assets over fiat dollars and dollar-denominated equities. Greens The Federal Reserve Debt Engine 26 April 2004    Texas Straight Talk 26 April 2004 verse 2 ... Cached Federal Reserve Chairman Alan Greenspan testifies for both US House and Senate committees several times each year, and last week appeared before the Joint Economic committee on which I serve. These appearances by Mr. Greenspan always cause quite a stir on Capitol Hill. Often the stock markets react within hours of his pronouncements regarding the health of the economy and the future of interest rates. Greens The Federal Reserve Debt Engine 26 April 2004    Texas Straight Talk 26 April 2004 verse 3 ... Cached Congress and the financial press treat Mr. Greenspan as an all-knowing sage, seeking his wisdom on political and even social issues that have nothing to do with monetary policy. During last week’s hearing Mr. Greenspan was asked his opinion on topics such as Social Security, tax cuts, federal spending, corporate accounting rules, the congressional budget process, and even immigration. It seems bizarre that a credulous Congress and public are willing to accept the judgment of on unelected, virtually unaccountable central banker while knowing little or nothing about the Federal Reserve itself. Greens The Federal Reserve Debt Engine 26 April 2004    Texas Straight Talk 26 April 2004 verse 4 ... Cached Judging by Mr. Greenspan’s statements to a Senate committee in February, Fed economists are confusing debt with wealth. Mr. Greenspan praises the “sustained expansion of the US economy,” but then goes on to highlight the real reason for the expansion: loose monetary policy and near-zero interest rates. Since Fed bankers set interest rates artificially low, the cost of borrowing money is very cheap. This leads to more and more consumer spending, which Mr. Greenspan touts as the driving force for economic growth. Greens The Federal Reserve Debt Engine 26 April 2004    Texas Straight Talk 26 April 2004 verse 7 ... Cached It’s not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves. The laws of supply and demand work better than any central banker to determine both the correct supply of money in the economy and the interest rate at which capital is available- without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution. Greens Gold Exposes the Dollar 06 December 2004    Texas Straight Talk 06 December 2004 verse 9 ... Cached The consequences of a rapidly declining dollar are not yet obvious to the American public. A trip to Europe costs more than it did a few years ago, but most Americans still don’t sense they are becoming poorer as the dollar falls. The long-term significance has not yet begun to sink in. However, our relative wealth as a nation is measured in dollars, and the steady erosion of the value of those dollars means we will all be poorer in the future. Federal Reserve chairman Alan Greenspan has relentlessly increased the money supply throughout his tenure, ostensibly to keep the economy expanding. But this artificial stimulation through cheap money comes with a price. When dollars are abundant, they are worth less. This is the reality facing Americans today, especially older Americans who rely on savings to finance their retirement years. Greens The Maestro Changes his Tune 21 February 2005    Texas Straight Talk 21 February 2005 verse 3 ... Cached Nearly 40 years ago, Federal Reserve chair Alan Greenspan wrote persuasively in favor of a gold monetary standard in an essay entitled Gold and Economic Freedom. In that essay he neatly summarized the fundamental problem with fiat currency in a few short sentences: “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… 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… 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.” Greens The Maestro Changes his Tune 21 February 2005    Texas Straight Talk 21 February 2005 verse 4 ... Cached Today, however, Mr. Greenspan has become one of those central planners he once denounced, and his views on fiat currency have changed accordingly. As the ultimate insider, he cannot or will not challenge the status quo, no matter what the consequences to the American economy. To renounce the fiat system now would mean renouncing the Fed itself, and his entire public career with it. The only question is whether history will properly reflect the destructive nature of Mr. Greenspan’s tenure. Greens The Maestro Changes his Tune 21 February 2005    Texas Straight Talk 21 February 2005 verse 5 ... Cached I had an opportunity to ask him about his change of heart when he appeared before the House Financial Services committee last week. Although Mr. Greenspan is a master of evasion, he was surprisingly forthright in his responses to me. In short, he claimed he was wrong about his predictions of calamity for the fiat U.S. dollar, that the Federal Reserve does a good job of essentially mimicking a gold standard, and that inflation is well under control. He even made the preposterous assertion that the Fed does not facilitate government expansion and deficit spending. In other words, he utterly repudiated the arguments he made 40 years ago. Yet this begs the question: If he was so wrong in the past, why should we listen to him now? Greens The Maestro Changes his Tune 21 February 2005    Texas Straight Talk 21 February 2005 verse 8 ... Cached Third, Fed policies do indeed have adverse political ramifications. Fiat currency and big government go hand-in-hand. Without a gold standard, Congress is free to spend recklessly and fall back on monetary expansion to pay the bills. Politically, it’s easier to print new dollars than raise taxes or borrow overseas. The Fed in essence creates paper reserves that enable Congress to undertake spending measures that far exceed tax revenues. The ill effects of this process are not felt by the politicians, who can always find popular support for new spending. Average Americans suffer, however, when their dollars are “confiscated through inflation,” as Mr. Greenspan termed it. Greens The Maestro Changes his Tune 21 February 2005    Texas Straight Talk 21 February 2005 verse 9 ... Cached It’s not enough to question the wisdom of Mr. Greenspan. Americans should question why we have a central bank at all, and whose interests it serves. The laws of supply and demand work better than any central banker to determine both the correct supply of money in the economy and the interest rate at which capital is available- without the political favoritism and secrecy that characterize central banks. Americans should not tolerate the manipulation of our economy and the inflation of our currency by an unaccountable institution. Greens Tax Reform is a Shell Game 07 March 2005    Texas Straight Talk 07 March 2005 verse 4 ... Cached One tax reform idea tacitly endorsed by Federal Reserve chairman Alan Greenspan calls for a national retail consumption tax to replace the existing income tax. Absent the outright repeal of the 16th Amendment, however, we cannot be sure that an income tax would not reappear at some point. One can easily imagine popular support for retaining the income tax on the “very rich,” which of course is how the 16th amendment originally was sold to a gullible public in the 1910s. Greens More of the Same at the Federal Reserve 28 November 2005    Texas Straight Talk 28 November 2005 verse 3 ... Cached Benjamin Bernanke, a former member of the Board of Governors at the Federal Reserve, is all but certain to be confirmed by the Senate as the next Chairman of that institution. He may find that the adulation given to Mr. Greenspan does not carry over into his tenure so easily, especially if he continues to help Congress run up huge deficits. Greens More of the Same at the Federal Reserve 28 November 2005    Texas Straight Talk 28 November 2005 verse 4 ... Cached Mr. Bernanke is a consummate Fed insider, widely seen by the financial press as the logical heir to Alan Greenspan. In fact, judging by his public statements he may be more like Greenspan than Greenspan himself. Greens More of the Same at the Federal Reserve 28 November 2005    Texas Straight Talk 28 November 2005 verse 5 ... Cached What I mean is that Mr. Bernanke appears to have embraced the idea that the Federal Reserve can create prosperity more than Mr. Greenspan ever did. Like his predecessor, Mr. Bernanke views our system of fiat currency as a tool for creating wealth out of thin air by producing more dollars, whether paper or electronic. But he seems to take things further than Greenspan by refusing even to consider the destructive consequences of monetary expansion. In fact, he earned dubious notoriety for this quote in a 2002 speech discussing the supposed threat of deflation in the American economy: "The U.S. government has a technology, called a printing press, that allows it to produce as many dollars as it wishes at essentially no cost." Greens More of the Same at the Federal Reserve 28 November 2005    Texas Straight Talk 28 November 2005 verse 7 ... Cached Inflation is not in check, as anyone who examines the cost of housing, energy, medical care, school tuition, and other basics can attest. In one sense the remarkable rise in housing prices over the last decade really just represents a drop in the value of the dollar. The artificial boom in the 1990s equity markets, engineered by Mr. Greenspan's relentless monetary expansion and interest rate cutting, ended badly for millions of Americans holding overinflated stocks. What will happen when the same thing happens with housing? Greens The Real Washington Scandal 06 February 2006    Texas Straight Talk 06 February 2006 verse 6 ... Cached The simplest way for the Fed to overcome these fears and maintain worldwide enthusiasm for the dollar is to raise interest rates and stop putting new dollars into circulation. But the Greenspan "boom" was based on the opposite approach. By cutting interest rates to the bone and vastly increasing the money supply, Greenspan made Americans feel rich-- first with the stock market bubble of the 1990s, and later with the housing bubble that is only now starting to burst. Greenspan was brilliant at making debt feel like wealth, but Mr. Bernanke inherits a very difficult situation. To maintain the value of the dollar, he must put the brakes on the money supply and raise the cost of borrowing. Such tough action is unlikely, however, given Mr. Bernanke's troubling public statements about the benefits of government printing presses. Greens The Real Washington Scandal 06 February 2006    Texas Straight Talk 06 February 2006 verse 7 ... Cached For years the Federal Reserve Bank and Congress have maintained a cozy relationship. The Fed, by pumping more and more money into the economy, has allowed Congress to spend wildly beyond the amount collected each year by the Treasury. Congress loves deficit spending, because new programs are always politically popular and tax hikes are always unpopular. In return, Congress has maintained a completely hands-off approach toward the Fed system, allowing Mr. Greenspan free reign to "run the economy" with tremendous deference from both the public and the press. Greens How Government Debt Grows 13 March 2006    Texas Straight Talk 13 March 2006 verse 5 ... Cached Former Federal Reserve Chairman Alan Greenspan made it easier for Congress to obscure the extent of federal debt. He endorsed a change in the law that redefined Social Security and veterans pensions. In reality those obligations are debts, just like any other bill that must be paid in the future. But Mr. Greenspan urged renaming these obligations “intergovernment accounts,” which magically changed them from debts to “accrued liabilities.” This semantic shift frees up lots of room under the debt ceiling for more borrowing. Greens The Declining Dollar Erodes Personal Savings 15 May 2006    Texas Straight Talk 15 May 2006 verse 8 ... Cached The world financial markets are betting against the dollar and against Mr. Bernanke’s chances of correcting the imbalances caused by Alan Greenspan. Our creditors, particularly Asian central banks, are losing their appetite for U.S. Treasuries. Our federal government’s huge debt and voracious appetite for deficit spending make our economy dependent on the actions of foreign governments and central bankers. Yet few Americans realize the extent to which their own government has sold out American sovereignty by borrowing money overseas. Greens Monetary Inflation is the Problem 04 December 2006    Texas Straight Talk 04 December 2006 verse 6 ... Cached Of course Mr. Bernanke inherited this tightrope act from his predecessor Alan Greenspan. The Federal Reserve did two things to artificially expand the economy during the Greenspan era. First, it relentlessly lowered interest rates whenever growth slowed. Interest rates should be set by the free market, with the availability of savings determining the cost of borrowing money. In a healthy market economy, more savings equals lower interest rates. When savings rates are low, capital dries up and the cost of borrowing increases. Greens Don't Blame the Market for Housing Bubble 19 March 2007    Texas Straight Talk 19 March 2007 verse 10 ... Cached The Federal Reserve provides the mother’s milk for the booms and busts wrongly associated with a mythical “business cycle.” Imagine a Brinks truck driving down a busy street with the doors wide open, and money flying out everywhere, and you’ll have a pretty good analogy for Fed policies over the last two decades. Unless and until we get the Federal Reserve out of the business of creating money at will and setting interest rates, we will remain vulnerable to market bubbles and painful corrections. If housing prices plummet and millions of Americans find themselves owing more than their homes are worth, the blame lies squarely with Alan Greenspan and Ben Bernanke. Greens The Money Has to Come From Somewhere 23 September 2007    Texas Straight Talk 23 September 2007 verse 2 ... Cached After the current turmoil in the markets, I was hoping that new Federal Reserve Chairman Ben Bernanke would see the big picture and act judiciously. Instead he signaled, with an aggressive rate cut, that we can expect a continuation of the monetary policies that got us here to begin with. Alan Greenspan released his memoir this week explaining his policies and decisions in the wake of the irrational exuberance they fueled. His successor should see that it is now time for a change of policy that addresses the root of our troubles. But instead of seeing an inflation problem, the Federal Reserve sees a liquidity problem, which is a little like extinguishing a forest fire with gasoline. In the wake of the rate cut, the Dow jumped and brokers cheered. Behind the headlines, however, the dollar quietly fell and was abandoned by more of the world in favor of more solid stores of wealth. Greens The Money Has to Come From Somewhere 23 September 2007    Texas Straight Talk 23 September 2007 verse 3 ... Cached The Fed does not act in a vacuum. Mr. Greenspan rightly criticizes Congress and the administration for abandoning principles of fiscal responsibility. However, monetary policy at the Fed did nothing solve money problems, but merely delayed impending crises by creating bubbles. Greens The Money Has to Come From Somewhere 23 September 2007    Texas Straight Talk 23 September 2007 verse 6 ... Cached Printing more money is the Fed’s typical answer, but we are on the verge of runaway inflation. We have printed so many dollars now that we are at parity with the Canadian dollar for the first time since 1976. Since the Fed stopped publishing M3, which tracks the total supply of dollars in the economy, we can’t even be sure how many dollars they are creating. Reported inflation is around 2%, but the method for calculating inflation changed in the 1980’s, largely at Mr. Greenspan’s urging. Private economists using the original method find actual inflation to be over 10%, which matches more closely the pain consumers in the real economy feel. Texas Straight Talk from 20 December 1996 to 23 June 2008 (573 editions) are included in this Concordance. Texas Straight Talk after 23 June 2008 is in blog form on Rep. Paul’s Congressional website and is not included in this Concordance. Remember, not everything in the concordance is Ron Paul’s words. Some things he quoted, and he added some newspaper and magazine articles to the Congressional Record. Check the original speech to see. Home Page    Contents    Concordance   E-mail list.