Alan Greenspan Reveals the Great Swindle of Central Banking

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We live in an age of economic shocks, or an Age of Turbulence if you ask Alan Greenspan. Households have been encouraged to take on record amounts of debt during an historic low in interest rates. Now, as interest rates are set to rise, the value of assets purchased with debt will fall. There are going to be an awful lot of very upset former homeowners in the Anglo Saxon world.

It’s especially vexing when the “surprise” interest rate shocks come from central bankers themselves, the men who are charged with maintaining price stability. They seem to be doing anything but maintaining stability lately. What gives?

To answer that question, we point you to an interview Alan Greenspan recently did with American comedian John Stewart. Greenspan was accidentally candid in answering Stewart’s fundamental questions. Greenspan casually revealed the great swindle that is modern central banking.

Stewart asked: Why, if Wall Street celebrates free markets, is there no free market in money? Why is the price of money set by bankers at the Fed and not the market?

Check out the full video below:

 
Greenspan’s answer to Stewart is that under a gold standard, the world felt “strangled”. What that really means is that under a gold standard, governments cannot print money or inflate away the value of debts by increasing the money supply. This means governments are not able to pay for wars with a printing press. It’s no wonder that both World Wars broke out once the gold standard was abandoned.

Greenspan also sheepishly acknowledges that by lowering rates to please stock investors, the Fed punishes savers, who face lower interest rates on bank deposits. If the agency in charge of preserving the purchasing power of your money actively discourages you from saving, how can you be surprised when people accumulate debt instead?

What Greenspan gets absolutely right is that human nature has not improved one whit in the last 5,000 years. Fear and greed are still the basic emotions that drive markets and drive decisions. Does it pay to be fearful today? Or is it time to be greedy?  

Dan Denning
The Daily Reckoning Australia

Dan Denning
Dan Denning examines the geopolitical and economic events that can affect your investments domestically. He raises the questions you need to answer, in order to survive financially in these turbulent times.
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4 Comments on "Alan Greenspan Reveals the Great Swindle of Central Banking"

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kojacq
Guest
What a fantastically candid interview !! For all the criticisms Greenspan has copped from all quarters, and decidedly so for the most part, for his obvious actions in helping to forment an environment that ensures that “human nature hasn’t effectively changed for 50 years”, Greenspan is unusually candid in this interview. Perhaps that also has to do with John Stewart’s ability to provide enough rope, as the interviewer, for the interviewee to respond to. Notice how Stewart rarely interrupts Greenspan, once the interviewee starts talking. This is a subtle & delicate, but effective interviewing technique. Thanks Dan, for alluding this… Read more »
Jono
Guest

Great video, glad you find it. I watched this a couple of days ago, and pressed the pause button right on the moment when Stewart asked Greenspan why we need a central bank.

His answer is not entirely satisfactory. He admitted many of the shortcomings, the poor ability of a central bank to predict human behaviour and market trends.

But this whole notion of stimulating activity by providing liquidity is a complete euphemism.

In my mind, its stimulating the kind of risky investments that wouldn’t be done if the loose credit weren’t there.

TheTruth
Guest
It has taken me years to understand the very simple basics that are hidden in plain view due to the willful deceit of those in power. This interview is ok yet does nothing to inform those watching of the truth. Simply.. Fiat=Fraud. Money printing (m3 money supply increase) = Inflation. Too much = Hyper inflation. We are now in the Weimar period of inflation. Yes, Right now. (Google it). Global Fiat collapse is apon us. The 1980’s recession will look like Christmas as will the 1930’s Depression. Precious Metals will climb in opposition to the currency collapse. IE Gold will… Read more »
nutPuppet
Guest

“It’s no wonder that both World Wars broke out once the gold standard was abandoned.” – nope it was the other way around!

wpDiscuz
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