I have a feeling if it were not for Ron Paul, the Fox Business news reporter would not have asked the question.

I cannot figure out how to embed this video on the page, so you will have to see it here.

At 6:33, the reporter asks: “So then, why do we need a central bank?”

Greenspan raises his eyebrows and moves back a bit, clearly a bit startled at the question. He recovers:

“Well, your question is a very interesting one. We have, at this particular stage, a fiat money, which is essentially printed by a government, and is usually the central bank that is authorized to do so. Some mechanism has got to be in place, which restricts the amount of money, either a gold standard, or a currency board, or something of that nature, because, unless you do that, all of history suggests that inflation will take hold with very deleterious (harmful or injurious) effects on economic activity.”

You bet, Al. Too bad the Fed didn’t and still doesn’t restrict the amount of money into the economy. It is me and my family that lose the purchasing power of our dollars via the Fed creating long term inflation. Have you forgotten your well written essay, “Gold and Economic Freedom”, back in 1967 (which you told Ron Paul in 2002 that you still believed was valid when he asked you? In fact, you stated that, “You wouldn’t change a single word”. You know, these words:

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. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the 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.


Reporter: “Now you were a great admirer, in fact an accolade, of Ayn Rand, the great philosopher, who believed in the absolute most limited role the government could play in people’s lives…She probably wouldn’t have been the greatest fan of the Federal Reserve Board, would she?”

Ah, Ayn Rand. I loved her work. She wrote a lengthy discourse frequently referred to as a “hymn to money” in “Atlas Shrugged” – mandatory reading in my world. I share some excerpts of that here:

Run for your life from anyone who tells you that money is evil. That sentence is the leper’s bell of an approaching looter. So long as men live together on earth and need means to deal with one another – their only substitute, if they abandon money, is the muzzle of the gun.


Whenever destroyers appear among men, they start by destroying gold money, for it is man’s protection, and the base of a moral existence. Destroyers seize gold and leave to its owners a counterfeit pile of paper. This kills all objective standards and delivers men into the arbitrary power of an arbitrary setter of values. Gold is an objective value, an equivalent of wealth produced. Paper money is mortgage on wealth that does not exist, backed by guns aimed at those who are expected to produce. Paper money is a check drawn by legal looters upon an account which is not theirs: upon the virtue of the victims. Watch for the day when it bounces, marked: “account overdrawn”.

When you have made evil the means of survival, do not expect men to remain good. Do not expect them to stay moral and to become fodder for the immoral. Do not expect them to produce when production is punished and looting rewarded. Do not ask who is destroying the world. You are.

If you ask me to name the proudest distinction of Americans, I would choose – because it contains all the others – the fact that they were the people who created the phrase “to make money”. No other language or nation has ever used this combination of words before; men have always thought of wealth as a static quantity – to be seized, begged, inherited, shared, looted, or obtained as a favor. Americans were the first to understand that wealth must be created. The phrase “to make money” holds the essence of morality.

Yet these were words for which the Americans were denounced by the rotten cultures of the looters’ continents. Now the looters’ credo has brought you to regard your proudest achievements as a hallmark of shame, your prosperity as guilt, your greatest men, the industrialists, as blackguards, and your magnificent factories as the product and property of muscular labor, the labor of whip-driven slaves, no better than the pyramids of Egypt. The rotter who simpers that he sees no difference between the power of gold and the power of the whip, ought to learn the difference on his own hide – as I think he will.

Greenspan: “Well, uh, I don’t know, because we never discussed that in particular. But I think she recognized that their are lots of institutions which we would be better without, but nonetheless, probably require, if indeed, society as a whole decides to do that. Remember, we live in a democratic society, and uh, compromise is the very essence of a democratic society because if we are all individuals with different ideas and we want to live together and have to do that, and there are numbers of us, myself included, who strongly believe that, uh, we did very well in the 1870 – 1914 period with the International Gold Standard, which essentially restricts…”

Why Alan! Ya think so?

Reporter cuts him off: “Yeah, we did well without the Federal Reserve. People forget, now the problem….” (he goes to a different topic)