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Greenspan's Stunning Admission: Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match


by Tyler Durden


For some reason, the Council of Foreign Relations, where ex-Fed-Chief Alan Greenspan spoke last week, decided the following discussion should be left out of the official transcript. We can perhaps understand why... as Gillian Tett concludes, "comments like that will be turning you into a rock star amongst the gold bug community."


Greenspan (Uncut):


TETT: Do you think that gold is currently a good investment?

GREENSPAN: Yes... Remember what we're looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can macth it.


Which is missing from the official CFR transcript...


GREENSPAN: ...remember, we had that first tapering discussion, we got a very strong market response. And then we reassured everybody to have no -- remember, tapering is still (audio gap) of an agreement that the central banks have made -- European central banks, I believe -- about allocating their gold sales which occurred when gold prices were falling down (audio gap) has been renewed this year with a statement that gold serves a very important place in monetary reserves.


And the question is, why do central banks put money into an asset which has no rate of return, but cost of storage and insurance and everything else like that, why are they doing that? If you look at the data with a very few exceptions, all of the developed countries have gold reserves. Why?


TETT: I imagine right now, it's because of a question mark hanging over the value of fiat currency, the credibility going forward.


GREENSPAN: Well, that's what I'm getting at. Every time you get some really serious questions, the 50 percent of the gold price determination begins to move.


TETT: Right.


GREENSPAN: And I think it is fascinating and -- I don't know, is Benn Steil in the audience?


TETT: Yes.


GREENSPAN: There he is, OK. Before you read my book, go read Benn's book. The reason is, you'll find it fascinating on exactly this issue, because here you have the ultimate test at the Mount Washington Hotel in 1944 of the real intellectual debate between the -- those who wanted to an international fiat currency which was embodied in John Maynard Keynes' construct of a banker, and he was there in 1944, holding forth with all of his prestige, but couldn't counter the fact that the United States dollar was convertible into gold and that was the major draw.Everyone wanted America's gold. And I think that Benn really described that in extraordinarily useful terms, as far as I can see. Anyway, thank you.


TETT: Right. Well, I'm sure with comments like that, that will be turning you into a rock star amongst the gold bug community.

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White House: Larry Summers Withdrew His Name From Consideration as Chairman of the Federal Reserve


"Earlier today, I spoke with Larry Summers and accepted his decision to withdraw his name from consideration for Chairman of the Federal Reserve," President Barack Obama said in the statement. "Larry was a critical member of my team as we faced down the worst economic crisis since the Great Depression, and it was in no small part because of his expertise, wisdom, and leadership that we wrestled the economy back to growth and made the kind of progress we are seeing today."

No reason was given for the withdrawal by Summers, who was oft-discussed as the president's preferred choice to succeed Ben Bernanke.

Please read more here.

Russia Today: Contest for Chairman of Federal Reserve?

Now that it's clear Fed Chairman Bernanke is out as of next January, two front runners are being floated by the mainstream media. These would be Larry Summers and Janet Yellen. We've profiled Summers before, and noted his complete mismanagement of the Harvard endowment fund. 

Thanks to Summers, I make RT news again (at the 19 minutes point of this video).  

Who Will be the Next Chairman of the Federal Reserve

Someone nominated me for Bernanke's job!  LOL!

Thanks, but no thanks!


sgt_doom's picture

Since they keep mentioning super-loser Larry Summers as a possibility, then by rights the nominee should be Iris Mack, first Black-American woman to receive a PhD in math from Harvard, and who spoke with Summers about their too-risky investment program, and shortly thereafter she was fired!

Of course, Ms. Mack turned out to be right, and Harvard lost billions, while super-loser Summers once again turned out to be wrong!


(And not a single Harvard future crook commented on this piece!)

Fri, 07/26/2013 - 21:32 | 3792161Pareto
Pareto's picture

thanks for this.  never knew of ms. mack.  this is why there really is no hope, when this kind of sh#t coninues to transpire.  they could appoint a monkey.  wouldn't f$%king matter.  sh#t won't ever change until they destroy themselves and everybody else with them - narcisisstic b$st#rds.



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Re: "Calculated Risk" is an unbiased website about the economy. 

Latest I hear is that Larry F$%king Summers is strongly in the running for fed head.  Fuck me.
Can we get Iris Mack instead? She is 1000X more qualified.

Please read more here, here and here.

ZeroHedge: "Larry Summers Wants To Be King Of The World – Just Say NO"

Submitted by lizzy36 on 07/16/2013 21:49 -0400

Imagine how astounded one was in May when the WSJ leaked a short list of nominees for Ben Bernanke’s job and number two on the list was Larry Summers.  My issue with Larry isn’t merely that he is a misogynistic bully, but rather that he has been wrong on just about every public policy initiative that he has ever put forth. He has perhaps the single worst judgement amongst his peer group (a very high bar indeed).  Larry has been failing up, since he entered the public sphere. The results have been catastrophic for many Americans.

From October 2010 Charles Ferguson:


Summers is unquestionably brilliant, as all who have dealt with him, including myself, quickly realize. And yet rarely has one individual embodied so much of what is wrong with economics, with academe, and indeed with the American economy. For the past two years, I have immersed myself in those worlds in order to make a film, Inside Job, that takes a sweeping look at the financial crisis. And I found Summers everywhere I turned.


Consider: As a rising economist at Harvard and at the World Bank, Summers argued for privatization and deregulation in many domains, including finance. Later, as deputy secretary of the treasury and then treasury secretary in the Clinton administration, he implemented those policies. Summers oversaw passage of the Gramm-Leach-Bliley Act, which repealed Glass-Steagall, permitted the previously illegal merger that created Citigroup, and allowed further consolidation in the financial sector. He also successfully fought attempts by Brooksley Born, chair of the Commodity Futures Trading Commission in the Clinton administration, to regulate the financial derivatives that would cause so much damage in the housing bubble and the 2008 economic crisis. He then oversaw passage of the Commodity Futures Modernization Act, which banned all regulation of derivatives, including exempting them from state antigambling laws.

Since much ink has been spent writing about Larry’s role in Glass-Steagall, I am not going to write about that matter.


Larry Summers v. Brooksley Born

Larry Summers does not put up with dissent, particularly from women. Further he seems unable to foresee the adverse consequences of his public policy. For instance, coincident to LTCM, Brooksley Born (head of the CFTC at the time) was making noise at about regulating derivatives. This is what happens next:


Summers, with the help of Alan Greenspan and then Secretary Robert Rubin, dismissed her concerns and accused her of trying to cause a massive liquidity crisis just for releasing a "concept paper" about regulating derivatives. Summers argued that Born would facilitate "the worst financial crisis since the end of World War II" and that leading bankers were very upset about this potential oversight.


Larry Summers (with help from his buddy Ken Lay) v. Gray Davis

Larry Summers (with a dose of Greenspan) then moved on to California along with his then buddy Ken Lay (CEO of Enron at the time) and told Governor Davis that “regulation” was causing the horrific blackouts in California during the summer of 2000. Governor Davis said it was “corporate tampering” that was causing the blackouts. As a result environmental regulation was rolled back to “comfort the market”. When Larry left Treasury he was offered a seat on the Board of Enron. He passed but in a note to Ken Lay, wrote:


Summers had also famously assured Lay that "I'll keep my eye on power deregulation and energy market infrastructure issues" shortly after becoming Treasury Secretary, in hand-written scrawl at the bottom of a letter.


Larry Summers v. Harvard

After leaving the government he took his brand of deregulation, insider dealings, inability to discern conflict of interest and misogyny to become the President of Harvard from 2001-2006. The destruction he caused at Harvard in a short 5 years was astounding.

  1. Larry Summers got Harvard and Andrei Shleifer (friend and protégé of Summers) to negotiate a deal with the DOJ that settled charges against Shleifer out of a conflict of interest that arose while Shleifer was advising on Russian Privatization in the 1990’s (a pet project of Summers while he was at the Clinton White house). Harvard paid $26.5m of the $28.5m settlement. Economics professor Andrei  Shleifer was allowed to retain his tenured position on faculty at Harvard.
  2. When one looks at the manner the Harvard endowment was decimated under Summers, one can only conclude that Larry didn’t really understand derivatives. Let’s start with Iris Mack, who joined the Company that oversaw the Harvard Endowment fund in 2002. She acted as a whistle-blower when she directly emailed Larry Summers about the level of risk unsophisticated traders were taking in swaps and derivatives on the endowments dime.  For her trouble she was promptly shown the door. Of course, by the time 2007 rolls around Harvard had $3.52B invested in interest rate swaps (signed off on by Summers) and derivatives. These investments lost $1B during 2008 and Harvard had to tap distressed bond markets to meet margin calls. Harvard paid almost $500M to various Banks to exit these investments and will pay another $500M over the next 40 years. 
  3. His comments on Cornel West and Women in Science were clearly just wrong (typical Summers). Those are just further evidence of his misguided arrogance, his own belief in white-male exceptionalism, and his lack of professional character.


Larry Summers v. Obama Administration

The Central Irony of a Financial Crisis is they can only be solved with more confidence, more borrowing, more lending, more spending…”In other words, after Obama came to power he handed his economic policy over to a guy whose sole goal was to keep the music playing for all his Wall Street friends.

Since Larry had such a massive handprint on most of the economic public policy that helped cause the financial crisis, it must have been a dream come true when he got to head the team responsible for coming up with a plan to get the country out of crisis. As expected Summers screwed that up as well.

Obama’s economic policy, in the first two years of his Administration can only be described as a disaster. Under Summers control his team, underestimated the impact of the financial crisis, decided to go with a stimulus mainly designed for the pet projects of Congressional Democrats, subverted all economic policy to the health of the Banks (not the banking system), and finally helped put forth the policy that allowed TBTF banks to escape prosecution due to the fact that such action would undermine the confidence in said banks and the financial system as a whole.

In addition Larry consistently undermined colleagues that dared to disagree with him. He censored Christina Romers work before it could reach the President’s desk.  He was finally described by his colleagues as a “good bureaucratic infighter”.



When one looks at the record of Larry Summers over the last 30 years, one would be unable to come up with a reason to short list this guy for any job let alone the Chairman of the Federal Reserve.  The preceding sections are merely the most notable instances where Larry won a battle (usually through bullying, and use of MAD) and lost, along with the American public, the ultimate war. In fairness, I do recognize that Larry Summers would bring two attributes to the Fed; a) his rolodex -helps to have home numbers of bank CEO’s worldwide; and b) his psychopathic ego. What Larry doesn’t have or shouldn’t have is any credibility as an economist, or any other position related to public policy and/or capital markets.

Larry Summers has never suffered the consequences of his professional behavior. Deference to pedigree has allowed Larry Summers to maintain his power, his prestige and the delusion that he too could be a Fed Chairman. Larry is not just a bad choice he is with 99.9% certainty the worst choice to become the next Fed Chairman.

RT Prime Interest: "Push To Jail Bankers"

Here's what's in your Prime Interest today:

Are the rats scampering off the sinking ship? The ship being the Fed. Governor Elizabeth Duke just wrote her own pink slip yesterday, in a surprising turn of events. This is ahead of the expected departure of Chairman Bernanke, who will likely not seek a third term this January.

All while the media is busy floating Larry Summers as Bernanke's replacement. But let's not forget he's the guy who helped tank the Harvard endowment fund, ignoring warnings from Iris Mack that it was loaded with toxic derivatives. So let's just put him in charge of the Fed's 3-trillion-dollar balance sheet.

And, speaking of derivatives, today was a critical deadline where an exemption to Dodd Frank was set to expire. The likes of JP Morgan have been able to trade in London and evade US rules. We know how that worked out thanks to a certain City of London Whale. But, a turf war compromise has been reached between the US and Europe. So don't worry, the $700 trillion derivatives juggernaut will continue, unabated.

Could there finally be a Fannie / Freddie wind-down in the works? Congress has been debating it for a while. And House Republicans are pushing for a bill that will quote "virtually remove the government from the housing market."

Except it won't -- because the replacement would be an insurance scheme similar to the current student loan scheme. And there's an additional sticking point. According to, Bruce Krasting, a new shareholder lawsuit against the mortgage giants will make it very difficult to exterminate the mortgage giants.

Bob talks control fraud with William Black -- the guy who exposed corruption in congress relating to the Savings and Loan scandal two decades ago.

And Perianne presents the new Ron Paul Channel -- coming to an internet near you this summer. We also have an interview with Chris Rossini from Economic Policy Journal and the Ron Paul Institue.

Larry Summers, Don't Blame Iris Mack If You're Not the Next Fed Chairman


Just in from a colleague of mine. Somehow I got caught up in the discussion for the selection of the Chairman of the Federal Reserve! SMH!


Eight reasons not to hire Larry Summers for Fed chief


FT: Larry Summers Has an Edge in the Race to Head the Federal Reserve

Federal Reserve Hacked by ANONYMOUS

The US Federal Reserve bank has confirmed one of its internal websites was broken into by hackers after the hacktivist group Anonymous was claimed to have stolen details of more than 4,000 bank executives.

Please read more here.

Marketplace Economy: Federal Reserve Turns $90 Billion Profit

While leaders in Washington stare down the fiscal cliff, let's not forget the fiscal fact that brought us to the edge: The annual U.S. government deficit of more than a trillion dollars.

But through it all, one government-related entity has been hauling in record surpluses.

Please read more here.

Federal Reserve: American's Wealth Fell 40% From 2007 to 2010

The average American family lost 38.8 percent of its wealth from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes, a Federal Reserve study shows.

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