"When our friends get elected, they aren't our friends any
more." -- M. Stanton Evans
My
deceased friend Stan Evans became deservedly famous for this law of politics.
This law
applies to high-level appointments.
Back in
the days when I was starting out in my career, Alan Greenspan wrote an article
for Ayn Rand's Objectivist newsletter. It was pro-gold standard. It has
been reprinted all over the Web. Back then, only a handful of us knew about it.
I reviewed it in 2007 here:
Greenspan
personally launched the modern era of extreme intervention by the Federal Reserve
in order to stop a collapse in the stock market. That took place in the second
month of his chairmanship at Federal Reserve. It was in late October, 1987. The
American stock market had dropped by 20% in one day. Around the world, other
markets had dropped by a comparable percentage. No one knew why then. No one
knows why now.
Greenspan
and the Federal Reserve Open Market Committee intervened the next day to inject
fiat money into the banking system in order to stop the collapse. That was the
beginning of what became known as "Greenspan's put." Stock market
investors knew from that point on that the Federal Reserve would not allow the
market to fall significantly. That carried through right until Bernake's
intervention in 2009.
Listen to
Greenspan today. He justifies his policies as FED chairman in terms of
gold.
When I was Chair of the Federal Reserve I used to testify before
US Congressman Ron Paul, who was a very strong advocate of gold. We had some
interesting discussions. I told him that US monetary policy tried to follow
signals that a gold standard would have created. That is sound monetary policy
even with a fiat currency. In that regard, I told him that even if we had gone
back to the gold standard, policy would not have changed all that much.
This
really is incredible. He is saying that his policies, and the Federal Reserve's
policies, were basically close to what the Federal Reserve's policies would
have been prior to August 15, 1971. In other words, he was basically a gold
standard man while he was chairman of the FED.
This is
what happens when our friends go to Washington.
Last
June, he made this comment:
If we went back on the gold standard and we adhered to the actual
structure of the gold standard as it exited prior to 1913, we'd be fine.
Remember that the period 1870 to 1913 was one of the most aggressive periods
economically that we've had in the United States, and that was a golden period
of the gold standard. I'm known as a gold bug and everyone laughs at me, but
why do central banks own gold now?
He
reminds me of the late William Simon when Simon was Secretary of the Treasury
under Gerald Ford. I was serving with Dr. Paul as his research assistant and
weekly newsletter writer. Simon had a reputation of being a free market man.
But he hated the gold standard. He referred to it as the "theology of
gold." He was strongly in favor of having the United States government add
more money to the International Monetary Fund. On my first day on the job, in
June 1976, I had the responsibility of writing Dr. Paul's response to hearings
in the House of Representatives on bankrolling this monstrosity. He was the
only opponent on the House Banking Committee. He was right. Simon was wrong.
For the entire period in which Simon was Secretary of the Treasury, he was an
apologist for the central banks, the IMF, and the whole Keynesian international
apparatus. Then, after he left the treasury, he became a multi-multimillionaire
hedge fund operator.
When our
friends go to Washington, they are not our friends anymore. Ron Paul was one of
the few exceptions. So is Warren Buffett's father, Howard, who served in the
House in the late 1940's. But he never convinced his son of his philosophy.
It
doesn't matter what their opinions are back home. It only matters how they vote
in Washington. When they have power, they reveal what they really believe. What
they believe in is power.
