November 2007

Part V

Dear Friend of Radio Liberty,

"I have recently read the article again, and I would not change a word."
Alan Greenspan's response to Ron Paul when asked if he would repudiate his 1966 essay, "Gold and Economic Freedom." [1]

"As William McChesney Martin Jr., a legendary chairman (in the FED) in the 1950s and 1960s, is alleged to have put it, the Fed's role is to order 'the punch bowl removed just when the party was really warming up.'"
Alan Greenspan, The Age of Turbulence, p. 111. [2]

"After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own."
Alan Greenspan, The Wall Street Journal, December 12, 2007. [3]

"By the time I joined Richard Nixon's campaign for the presidency in 1968, I had long since decided to engage in efforts to advance free-market capitalism as an insider. . . . When I agreed to accept the nomination as chairman of the president's Council of Economic Advisors, I knew I would have to pledge to uphold not only the Constitution but also the laws of the land, many of which I thought were wrong."
Alan Greenspan, The Age of Turbulence, p. 52. (italics added) [4]

If you attempt to determine the cause of the genocidal wars of the last century, you will encounter an impenetrable wall of deceit and deception that was erected to conceal the truth about the origin of the conflicts. In a similar manner, if you try to determine the cause of the current economic crisis, you will discover it is difficult to discern the truth. What do we know?

* Alan Greenspan socialized with Henry Kissinger, David Rockefeller, and the men who created the fraudulent economic system that controls our nation today. Did he support the fraudulent system? Did he work for David Rockefeller and his subversive associates? [5]

* Alan Greenspan promoted the stock market bubble that collapsed in 2000, and created the housing bubble that collapsed in 2006. [6]

*Alan Greenspan opposed the effort to regulate the mortgage industry and prevent the fraudulent lending practices that led to the current economic crisis. [7]

* Alan Greenspan encouraged creative mortgage financing, sub-prime mortgage lending, and the use of adjustable rate mortgages. [8]

* Alan Greenspan understands the danger of fiat money and the importance of having a gold-backed currency, yet he expanded the money supply and promoted the inflationary spiral that is undermining the U.S. economy today. [9]

* Several years ago, when Congressman Ron Paul asked Alan Greenspan if he would disavow his 1966 essay, "Gold and Economic Freedom," the Chairman of the Fed replied:

"I have recently read the article again, and I would not change a word." [10]

That was a very important admission because it reflects the view of the man who created the current economic crisis. If you want to understand what is happening today, and what you must do to protect your assets, you should read several times the essay that Greenspan wrote in 1966. The first segment of the essay was reproduced in the October 2007 Radio Liberty letter. The remainder of the essay is reproduced this month.

Alan Greenspan's remarks are recorded in bold type. My remarks are recorded in italics.

"A fully free banking system and fully consistent gold standard have not as yet been achieved. But prior to World War I, the banking system in the United States (and in most of the world) was based on gold and even though governments intervened occasionally, banking was more free than controlled. Periodically, as a result of overly rapid credit expansion, banks became loaned up to the limit of their gold reserves, interest rates rose sharply, new credit was cut off, and the economy went into a sharp, but short-lived recession. (Compared with the depressions of 1920 and 1932, the pre-World War I business declines were mild indeed.)" [11]

Almost all the money that was in circulation before World War I was backed by gold. If banks issued too many loans, they stimulated the economy, prices increased, and the banks were forced to raise their interest rate which led to a temporary contraction of the economy. Thus the system was self regulating.

"It was limited gold reserves that stopped the unbalanced expansions of business activity, before they could develop into the post-World War I type of disaster. The readjustment periods were short and the economies quickly reestablished a sound basis to resume expansion. . . . But the process of cure was misdiagnosed as the disease: if shortage of bank reserves was causing a business decline - argued economic interventionists - why not find a way of supplying increased reserves to the banks so they never need be short! If banks can continue to loan money indefinitely - it was claimed-there need never be any slumps in business. And so the Federal Reserve System was organized in 1913. It consisted of twelve regional Federal Reserve banks nominally owned by private bankers, but in fact government sponsored, controlled, and supported. Credit extended by these banks is in practice (though not legally) backed by the taxing power of the federal government. Technically, we remained on the gold standard; individuals were still free to own gold, and gold continued to be used as bank reserves. But now, in addition to gold, credit extended by the Federal Reserve banks (paper reserves) could serve as legal tender to pay depositers." [12]

The Brotherhood of Darkness created the Federal Reserve System so they could produce fiat money, enrich themselves, stimulate the American economy, and make the U.S. the most powerful nation in the world, but, in the process, they destroyed the value of our currency, and laid the foundation for the current financial crisis.

"When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve's attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain's gold loss and avoid the political embarrassment of having to raise interest rates." [13]

The Fed pumped a large volume of fiat money into the U.S. economy in the 1920s, and produced an economic boom, but that led to the Great Depression of the 1930s. The same thing happened in the 1970s, in the late 1990s, and during the recent housing boom.

"The "Fed" succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market - triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930s." [14]

Alan Greenspan understands the danger of fiat money, yet he presided over the greatest increase in the money supply that the United States has experienced since its inception.

"With a logic reminiscent of a generation earlier, statists argued that the gold standard was largely to blame for the credit debacle which led to the Great Depression. If the gold standard had not existed, they argued, Britain's abandonment of gold payments in 1931 would not have caused the failure of banks all over the world. (The irony was that since 1913, we had been, not on a gold standard, but on what may be termed 'a mixed gold standard'; yet it is gold that took the blame.) But the opposition to the gold standard in any form - from a growing number of welfare-state advocates - was prompted by a much subtler insight: the realization that the gold standard is incompatible with chronic deficit spending (the hallmark of the welfare state). Stripped of its academic jargon, the welfare state is nothing more than a mechanism by which governments confiscate the wealth of the productive members of a society to support a wide variety of welfare schemes. A substantial part of the confiscation is effected by taxation. But the welfare statists were quick to recognize that if they wished to retain political power, the amount of taxation had to be limited and they had to resort to programs of massive deficit spending, i.e., they had to borrow money, by issuing government bonds, to finance welfare expenditures on a large scale." [15]

The welfare statists confiscate the wealth of the productive members of society through taxation, inflation, and decreasing the value of U.S. dollars. They realized they couldn't finance their social programs and wars through taxation, so they issued government bonds, and borrowed money they knew would never be repaid. A similar situation exists today. When President Bush took office, he increased federal spending, cut taxes, borrowed money, and created a wave of prosperity that lasted until the housing bubble burst and the U.S. economy began to contract.

"Under a gold standard, the amount of credit that an economy can support is determined by the economy's tangible assets, since every credit instrument is ultimately a claim on some tangible asset. But government bonds are not backed by tangible wealth, only by the government's promise to pay out of future tax revenues, and cannot easily be absorbed by the financial markets. A large volume of new government bonds can be sold to the public only at progressively higher interest rates. Thus, government deficit spending under a gold standard is severely limited. The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit. They have created paper reserves in the form of government bonds which - through a complex series of steps - the banks accept in place of tangible assets and treat as if they were an actual deposit, i.e., as the equivalent of what was formerly a deposit of gold. The holder of a government bond or of a bank deposit created by paper reserves believes that he has a valid claim on a real asset. But the fact is that there are now more claims outstanding than real assets. The law of supply and demand is not to be conned. As the supply of money (of claims) increases relative to the supply of tangible assets in the economy, prices must eventually rise. Thus the earnings saved by the productive members of the society lose value in terms of goods. When the economy's books are finally balanced, one finds that this loss in value represents the goods purchased by the government for welfare or other purposes with the money proceeds of the government bonds financed by bank credit expansion." [16]

When the Fed issues bonds, they increase the money supply, decrease the value of the currency, and steal the wealth of the productive members of society.

"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 statist's antagonism toward the gold standard." [17]

If you analyze Alan Greenspan's 1966 essay, and his recent book, The Age of Turbulence, it is obvious that he understands the danger of fiat money and the importance of a gold-backed currency. On page 110 of The Age of Turbulence, Greenspan wrote:

"No wonder politicians often find the Fed a hindrance. Their better selves may want to focus on America's long-term prosperity, but they are far more subject to constituent's immediate demands. That's inevitably reflected in their economic policy preferences. If the economy is expanding, they want it to expand faster; if they see an interest rate, they want it to be lower - and the Fed's monetary discipline interferes. As William McChesney Martin Jr., a legendary chairman in the 1950s and 1960s, is alleged to have put it, the Fed's role is to order 'the punch bowl removed just when the party was really really warming up." [18]

When the FED increases the money supply and lowers interest rates, credit becomes available, employment expands, and investors prosper but the value of our currency declines. On the other hand, if the FED decreases the money supply and raises interest rates, the economy slows and employment contracts, but the value of the currency increases. Congress established the Fed in 1913 to maintain the value of the U.S. dollar, and that is why Alan Greenspan should have removed the punch bowl (expanding credit) when the party (the U.S. economy) began to warm up, but he didn't do that.

Greenspan's recent (December 12, 2007) Wall Street Journal article states:

"On Aug. 9, 2007, and the days immediately following, financial markets in much of the world seized up. Virtually overnight the seemingly insatiable desire for financial risk came to an abrupt halt as the price of risk unexpectedly surged. Interest rates on a wide range of asset classes, especially interbank lending, asset-backed commercial paper and junk bonds, rose sharply. . . . Over the past five years, risk had become increasingly underpriced as market euphoria, fostered by an unprecedented global growth rate, gained cumulative traction.

The crisis was thus an accident waiting to happen. If it had not been triggered by the mispricing of securitized subprime mortgages, it would have been produced by eruptions in some other market." [19]

What was the basis of the market euphoria? The fact that Alan Greenspan lowered the Fed's interest rate to 1% in 2003, maintained that rate for a year, and flooded the world economy with fiat money.

"The root of the current crisis, as I see it, lies back in the aftermath of the Cold War, when . . . market capitalism quietly, but rapidly, displaced much of the discredited central planning that was so prevalent in the Third World. . . . After more than a half-century observing numerous price bubbles evolve and deflate, I have reluctantly concluded that bubbles cannot be safely defused by monetary policy or other policy initiatives before the speculative fever breaks on its own." [20]

The current monetary crisis has nothing to do with the Cold War. The world financial system is crumbling and will never be the same again.

Citigroup is the largest financial institution in the United States, and one of the largest financial institutions in the world. The corporation recently sold 4.9% of their stock to the Abu Dhabi Investment Authority for $7.5 billion to offset their loss from the purchase of Collateralized Debt Obligation (CDO). [21]

The Union Bank of Switzerland is one of the two largest banks in Switzerland. They recently sold between 7.3% and 10.5% of their stock to the Singapore government for $9.75 billion, and between 1.3% and 1.9% of their stock to an anonymous Middle Eastern investor for 2 billion Swiss francs in an effort to cover part of their losses from CDO investments. [22]

Merrill Lynch, one of the four largest financial institutions in the U.S., faces a $15.2 billion loss from CDO investments. [23]

Bank of America closed the Columbia Strategic Cash Portfolio Fund on December 12, 2007, because the value of the fund's portfolio fell from $40 billion (several months ago) to $12 billion. [24]

Major lending institutions have closed their doors, inflation is increasing, thousands of people have lost their jobs, several hundred thousand people have lost their homes, consumer spending is declining, automotive sales are falling, and Morgan Stanley has issued a recession alert. [25]

Why is this happening? I believe it is taking place because Alan Greenspan engineered the collapse of the world monetary system. Why would he do that? Because it was the only way to liberate the American people from the financial control of the Brotherhood of Darkness (BOD), and restore our freedom. Why do I say that?

When Greenspan was a young man, he was a disciple of a woman named Ayn Rand who espoused free- market capitalism, personal freedom, and opposed the socialist programs that were being imposed on the American people at that time. [26] I believe he is still dedicated to Ayn Rand's philosophy because he wrote:

"By the time I joined Richard Nixon's campaign for the presidency in 1968, I had long since decided to engage in efforts to advance free-market capitalism as an insider, rather than as a critical pamphleteer. When I agreed to accept the nomination as chairman of the president's Council of Economic Advisors, I knew I would have to pledge to uphold not only the Constitution, but also the laws of the land, many of which I thought were wrong. The existence of a democratic society governed by the rule of law implies a lack of unanimity on almost every aspect of the public agenda. Compromise on public issues is the price of civilization, not an abrogation of principle." [27]

If I am correct, Alan Greenspan precipitated the current financial crisis because he wanted to destroy the fraudulent economic system that the BOD created to enslave the American people. Will Alan Greenspan's plan succeed? If it does, the world economy will collapse, and many people will be impoverished, but the BOD's effort to install a world government and destroy Christianity will be delayed for a time, and, with God's help, we will maintain our freedom for a few more years.

What can you and I do? We must reach as many Americans as we can during the coming months because they will want to understand the origin of the financial crisis. What will you tell them? You can disseminate this series of Radio Liberty letters which is available in pamphlet form, Financial Meltdown. You can copy and disseminate my pamphlet, A History of Money, you can copy and disseminate my DVD, Financial Tsunami, and this is a great time to get people to read my book, Brotherhood of Darkness, or watch the DVD by the same name.

Since our supply of "Brotherhood of Darkness" DVDs is almost exhausted, I am making a special offer. If you would like to purchase 25 copies of the DVD for $99 plus shipping, please contact me. It is a great price, and an excellent way to convince people that we are involved in a spiritual battle for the souls of men, and the survival of Christian civilization.

"Like a mighty army, Moves the Church of God;
Brothers, we are treading Where the saints have trod;
We are not divided, All one body we,
One in hope and doctrine, One in charity.

Crowns and thrones may perish, Kingdoms rise and wane,
But the Church of Jesus, Constant will remain;
Gates of hell can never, Gainst that Church prevail;
We have Christ's own promise, And that cannot fail.

Onward, then, ye people, Join our happy throng,
Blend with ours your voices, In the triumph song;
Glory, laud, and honor, Unto Christ the King;
This thro' countless ages, Men and angels sing.

Onward, Christian soldiers, Marching as to war,
With the cross of Jesus Going on before." [28]

Barbara and I appreciate your faithful support and your prayers.

Yours in Christ,

Stanley Monteith


1. Personal communication with Congressman Ron Paul's Press Secretary.
2. Alan Greenspan, The Age of Turbulence, The Penguin Press, New York, 2007, p. 111.
3. Alan Greenspan, "The Roots of the Mortgage Crisis," The Wall Street Journal, December 12, 2007, p. A19.
4. The Age of Turbulence, op. cit., p. 52.
5. Ibid., p. 81.
6. See also: Ted Lieu, "Greenspan and his policies bear much blame in foreclosure crisis," San Jose Mercury News, December 12, 2007, p. 18A.
7. Ted Lieu, op. cit.
8. Ibid.
10. Personal communication, op. cit.
11. Ibid., p 2-3.See reference 8, pp. 2-3.
12. Ibid., p. 3.
13. Ibid., p. 3.
14. Ibid., p. 4.
15. Ibid., p. 3-4
16. Ibid., p. 4.
17. Ibid., p. 4.
18. The Age of Turbulence, op. cit., pp. 110-111.
19. Alan Greenspan, "The Roots of the Mortgage Crisis," op. cit.
20. Ibid.
21. "UBS's Subprime-Mortgage Hit Deepens Credit Worries," The Wall Street Journal, December 11, 2007, p. A23.
22. Ibid.
23. Ibid.
26. The Age of Turbulence, op. cit., p. 52.
27. Ibid.
28. Charles Johnson, One Hundred & One Famous Hymns, Hallberg Publishing Corporation, 1982, p. 81, "Onward Christian Soldiers."

Return to Radio Liberty home page

Please help Radio Liberty to expand our ministry to other outlets with your gift.