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Message:: [QUOTE="SteveCaruso, post: 2115835, member: 37497"]That quote doesn't quite catch Greenspan's nuance. Here's a full transcript I did directly from the video: <blockquote>Tett: Do you think that gold is *currently* a good investment, given what you're saying about the potential for *turmoil*? Greenspan: Yes. Tett: Do you put -- [laughter] Greenspan: [chuckle] I mean I -- Economists are usually perfect and equivocated. In this- In this case I didn't equivocate. Look- Remember what- remember what we're looking at. Gold is a currency. It is still, by all evidence, the premier currency where no fiat currency, including the dollar, can match it. And so that the issue is if we are looking at a question of *turmoil*, you will find as we always have in the past, it moves into the gold price. But the gold price is actually *half* a commodity price, so when the economy is weakening, it goes down like copper. Uh- but it's also got a monetary characteristic which is *intrinsic*. It's not in-bred into human beings -- I cannot conceive of any mechanism by which you could say that -- but it behaves it- so it is. Intrinsic currencies like gold and silver, for example, are acceptable without a third-party guarantee. And-uh I mean -- for example the end of World War 2 -- or just *at* the end of it, Germany could *not* import goods *without* paying for it in gold. The-uh- person who *shipped* the goods in would accept the gold, and didn't care if there was any credit associated with it. That is a very rare phenomenon it's-uh-it's the *reason* why -- for example -- in uh-uh a renewal of an agreement that the Central Banks of-- the European Central Banks, I believe, about allocating their gold sales, which occurred when gold prices were falling down -- that has been renewed this year with a statement that it, gold, serves a very important place in monetary reserves. And the question is: Why did 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 very few exceptions, all of the developed countries have gold reserves. Why? Tett: I imagine right now it's because of uh- question mark hanging over the value of fiat currency, or the credibility going forward. Greenspan: Well that's what I'm getting at. Every time uh-uh-uh- you get some really serious questions, the 50% of the gold price determination begins to move. Tett: Right. Greenspan: And uh- I-I think it is fascinating-- uh- and- I know is Benn Steil in the audience? Tett: Yes. Greenspan: There he is-- OK-- Uh, before you read my book, go read Benn's book. [laughter] 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 -- uh- those who wanted an international fiat currency which was embodied in John Maynard Keynes' construct of a bank core, 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 American's- America's gold. And I think that Benn really described that in extraordinarily useful terms, as far as I can see. Anyway, thank you. </blockquote>So, do you see what he's *really* saying with that comment, [USER=73104]@Gilbert[/USER] ? <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" />[/QUOTE]

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