October 2007

Part IV

Dear Friend of Radio Liberty,

"Since we went on a total paper standard in 1971, we have increased our money supply essentially 12-fold. Debt in this country, federal debt, has gone up 19-fold but that is in nominal dollars, not in real dollars. . . . So what are the conditions that might exist for the central bankers of the world to reconsider gold?"
Congressman Ron Paul, question to Alan Greenspan, July 20, 2005 [1]

"I have recently read the article again, and I would not change a word."
Alan Greenspan's reply to Congressman Ron Paul when the chairman was asked if he would repudiate his 1966 essay, "Gold and Economic Freedom." [2]

Alan Greenspan is the primary architect of the currency crisis that is disrupting the economy of the world. Why did he create the stock market bubble that collapsed in 2000, and the housing bubble that is collapsing today?

Government officials claim the outlook for the American economy is good, but that isn't true.

* The Bureau of Labor Statistics (BLS) claims the core U.S. inflation rate is 2.1%, but independent analysts estimate the true rate of inflation is 11%, and will probably increase to 14-15% by the end of next year (2008). The price of wheat, corn, milk, orange juice, apples, fuel, and many other products has increased dramatically during the past year. [3]

* When the housing bubble ended in 2007, property values began to fall, and the building industry (which makes up 25% of the GNP) began contracting.

* Financial institutions throughout the world hold Collateralized Debt Obligations (bundled sub-prime mortgage loans) that are worth 25-50% less than they cost ($ 1-4 trillion).

* The price of oil has risen from $20.00 a barrel in 2001 to almost $100.00 a barrel at the present time.

* The value of the U.S. dollar has fallen over 10% in comparison to other currencies during the past year.

* The dollar has lost over 40% of its value in comparison with the Euro during the past 3 years.

* Israel and Egypt recently requested that their yearly stipend from the U.S. be paid in Euros rather than dollars. [4]

* Foreign investors own 25% of the industrial base of our nation, and are currently using their massive U.S. currency reserves to purchase other U.S. industries, and the infrastructure of our nation.

* The Baby Boomers will begin retiring next year (2008) because they want to recoup some of the money they paid into Social Security before the system collapses.

* The Bush administration helps illegal immigrants enter our nation and take American jobs.

* The U.S. government rewards U.S. corporations that transfer their manufacturing facilities to other nations.

* The U.S. must borrow $2 - 2.5 billion a day to meet current expenses.

* The official U.S. debt is over $9 trillion, but according to the General Accounting Office (GAO), the true U.S. debt is over $50 trillion, and cannot be paid. [5]

* The U.S. is the largest debtor nation in the world.

Why are these things happening? They are taking place because Alan Greenspan increased the money supply, eased credit, and intentionally destroyed the value of the American dollar. Did he understand what he was doing?

I have reproduced segments of the interchanges that took place between Congressman Ron Paul and Alan Greenspan when the FED Chairman testified before the House Banking Committee in 2004 and 2005. Their remarks are reproduced in bold type. My views are printed in italics.

Congressman Ron Paul: (July 20, 2005)

"Since we went on a total paper standard in 1971, we have increased our money supply essentially 12-fold. Debt in this country, federal debt, has gone up 19-fold, but that is in nominal dollars, not in real dollars. . . . So what are the conditions that might exist for the central bankers of the world to reconsider gold?" [6]
Alan Greenspan:

"Well, you say central banks own gold or monetary authorities own gold. The United States is a large gold holder. And you have to ask yourself: Why do we hold gold? And the answer is essentially, implicitly, the one that you've raised namely that, over the generations, when fiat monies arose and, indeed, created the type of problems which I think you correctly identify of the 1970s, although the implication that it was some scheme or conspiracy gives it a much more conscious focus than actually, as I recall, it was occurring. It was more inadvertence that created the basic problems." [7]

Alan Greenspan was aware of the fact that fiat money systems create inflation, and that he was destroying the value of our currency, but he concealed that information by changing the subject, mentioning a conspiracy, and using the pattern of verbosity that came to be known as "Greenspeak." Greenspan continued:

"But as I've testified here before to a similar question, central bankers began to realize in the late 1970s how deleterious a factor the inflation was. And, indeed, since the late '70s, central bankers generally have behaved as though we were on the gold standard. And, indeed, the extent of liquidity contraction that has occurred as a consequence of the various different efforts on the part of monetary authorities is a clear indication that we recognize that excessive creation of liquidity creates inflation which, in turn, undermines economic growth. So that the question is: Would there be any advantage, at this particular stage, in going back to the gold standard? And the answer is: I don't think so, because we're acting as though we were there." [8]

Alan Greenspan claimed the central banks were acting as if there was a functional gold standard, but that isn't true. He lowered the FED's interest rate to 1% in 2002 and 2003, eased credit, expanded the money supply, and created the housing bubble that precipitated the monetary crisis that threatens the economic stability of the world today. For documentation, please reread my last three newsletters.

Alan Greenspan continued:

"Would it have been a question at least open in 1981, as you put it? And the answer is yes. Remember, the gold price was $800 an ounce. We were dealing with extraordinary imbalances, interest rates were up sharply, the system looked to be highly unstable, and we needed to do something. Now, we did something. The United States Paul Volcker, as you may recall, in 1979 came into office and put a very severe clamp on the expansion of credit, and that led to a long sequence of events here, which we are benefiting from up to this date. So I think central banking, I believe, has learned the dangers of fiat money, and I think, as a consequence of that, we've behaved as though there are, indeed, real reserves underneath the system." [9]

That isn't true. Some central banks are increasing M3 (Money Stock) from 10% to 30% a year which is leading to rampant inflation. Why did Alan Greenspan conceal that information? Why did he create the stock market bubble and the housing bubble that led to the current economic collapse?

Approximately 4 years ago Congressman Ron Paul confronted Alan Greenspan after a meeting, and asked him if he would repudiate his 1966 essay, "Gold and Economic Freedom." I asked Congressman Ron Paul's press secretary about the encounter, and he told me that Greenspan replied:

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

You cannot understand the frightening events that lie ahead, or the unique opportunity we have, unless you understand the significance of that statement. The most important segments of Alan Greenspan's 1966 essay are reproduced below. The chairman's remarks are reproduced in bold type, my remarks are reproduced in italics:

"Gold And Economic Freedom"

"An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense - perhaps more clearly and subtly than many consistent defenders of laissez-faire - that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other." [11]

People who support freedom support gold, while those who want to control the public (the statists) oppose the use of gold as a medium of exchange.

"In order to understand the source of their antagonism, it is necessary first to understand the specific role of gold in a free society. Money is the common denominator of all economic transactions. It is that commodity which serves as a medium of exchange, is universally acceptable to all participants in an exchange economy as payment for their goods or services, and can, therefore, be used as a standard of market value and as a store of value, i.e., as a means of saving. The existence of such a commodity is a precondition of a division of labor economy. If men did not have some commodity of objective value which was generally acceptable as money, they would have to resort to primitive barter or be forced to live on self-sufficient farms and forgo the inestimable advantages of specialization. If men had no means to store value, i.e., to save, neither long-range planning nor exchange would be possible." [12]

The use of gold is an essential part of a market economy.

"What medium of exchange will be acceptable to all participants in an economy is not determined arbitrarily. First, the medium of exchange should be durable. In a primitive society of meager wealth, wheat might be sufficiently durable to serve as a medium, since all exchanges would occur only during and immediately after the harvest, leaving no value-surplus to store. But where store-of-value considerations are important, as they are in richer, more civilized societies, the medium of exchange must be a durable commodity, usually a metal. A metal is generally chosen because it is homogeneous and divisible: every unit is the same as every other and it can be blended or formed in any quantity." [13]

Nothing has ever worked as well as gold.

"Precious jewels, for example, are neither homogeneous nor divisible. More important, the commodity chosen as a medium must be a luxury. Human desires for luxuries are unlimited and, therefore, luxury goods are always in demand and will always be acceptable. Wheat is a luxury in underfed civilizations, but not in a prosperous society. Cigarettes ordinarily would not serve as money, but they did in post-World War II Europe where they were considered a luxury. The term "luxury good" implies scarcity and high unit value. Having a high unit value, such a good is easily portable; for instance, an ounce of gold is worth a half-ton of pig iron." [14]

That's why gold is the ideal medium of exchange.

"In the early stages of a developing money economy, several media of exchange might be used, since a wide variety of commodities would fulfill the foregoing conditions. However, one of the commodities will gradually displace all others, by being more widely acceptable. Preferences on what to hold as a store of value, will shift to the most widely acceptable commodity, which, in turn, will make it still more acceptable. The shift is progressive until that commodity becomes the sole medium of exchange. The use of a single medium is highly advantageous for the same reasons that a money economy is superior to a barter economy: it makes exchanges possible on an incalculably wider scale." [15]

"Whether the single medium is gold, silver, seashells, cattle, or tobacco is optional, depending on the context and development of a given economy. In fact, all have been employed, at various times, as media of exchange. Even in the present century, two major commodities, gold and silver, have been used as international media of exchange, with gold becoming the predominant one. Gold, having both artistic and functional uses and being relatively scarce, has significant advantages over all other media of exchange. Since the beginning of World War I, it has been virtually the sole international standard of exchange." [16]

One of the primary problems with the use of gold as a medium of exchange is its weight.

"If all goods and services were to be paid for in gold, large payments would be difficult to execute and this would tend to limit the extent of a society's divisions of labor and specialization. Thus a logical extension of the creation of a medium of exchange is the development of a banking system and credit instruments (bank notes and deposits) which act as a substitute for, but are convertible into, gold. A free banking system based on gold is able to extend credit and thus to create bank notes (currency) and deposits, according to the production requirements of the economy. Individual owners of gold are induced, by payments of interest, to deposit their gold in a bank (against which they can draw checks)." [17]

The use of gold as a medium of exchange encourages formation of a banking system.

"But since it is rarely the case that all depositors want to withdraw all their gold at the same time, the banker need keep only a fraction of his total deposits in gold as reserves. This enables the banker to loan out more than the amount of his gold deposits (which means that he holds claims to gold rather than gold as security of his deposits). But the amount of loans which he can afford to make is not arbitrary: he has to gauge it in relation to his reserves and to the status of his investments." [18]

Thus gold becomes the foundation of fractional reserve banking.

"When banks loan money to finance productive and profitable endeavors, the loans are paid off rapidly and bank credit continues to be generally available. But when the business ventures financed by bank credit are less profitable and slow to pay off, bankers soon find that their loans outstanding are excessive relative to their gold reserves, and they begin to curtail new lending, usually by charging higher interest rates. This tends to restrict the financing of new ventures and requires the existing borrowers to improve their profitability before they can obtain credit for further expansion. Thus, under the gold standard, a free banking system stands as the protector of an economy's stability and balanced growth. When gold is accepted as the medium of exchange by most or all nations, an unhampered free international gold standard serves to foster a world-wide division of labor and the broadest international trade. Even though the units of exchange (the dollar, the pound, the franc, etc.) differ from country to country, when all are defined in terms of gold the economies of the different countries act as one - so long as there are no restraints on trade or on the movement of capital." [19]

If a currency is backed by gold, it can be interchanged throughout the world for other currencies.

"Credit, interest rates, and prices tend to follow similar patterns in all countries. For example, if banks in one country extend credit too liberally, interest rates in that country will tend to fall, inducing depositors to shift their gold to higher-interest paying banks in other countries. This will immediately cause a shortage of bank reserves in the "easy money" country, inducing tighter credit standards and a return to competitively higher interest rates again." [20]

Alan Greenspan understood the banking and monetary problems the U.S. faced in the aftermath of World War I, but he didn't know about the secret societies that controlled the world at that time, or their 3000 year-old plan to use the wealth and military power of the U.S. to create an American Empire, establish world government, and create a new religion.

Time and space limitations prevent me from providing you with the remaining text of Greenspan's 1966 essay, so I will complete his treatise in November because I want you to understand why he set out to destroy the world monetary system.

I want to apologize for the fact that this October 2007 Radio Liberty letter is delayed, but I am recovering from open heart surgery, and got behind in my work. We do appreciate the expressions of concern, but do ask that you not call the answering service we use as they also take emergency and doctors' calls, and we do not want to endanger the lives of other people.

We are entering the most confusing, challenging, dangerous, exciting, and frightening period of our lives. What can you do? You must understand the events that are taking place (1) financially, (2) politically, and (3) spiritually.

(1) I suggest you reread my last three newsletters, Financial Meltdown I, II, and III, read my treatise, A History of Money: What You Should Know, watch my DVD, Financial Tsunami, study the syllabus that comes with it, read Ed Griffin's book, The Creature from Jekyll Island, and read Professor Sutton's treatise, The Federal Reserve Conspiracy. If you learn this information you will know far more than most college professors, and will have a chance to survive the financial disaster that lies ahead.

(2) We must work for Congressman Ron Paul's election, and pray for his safety. I hope you will contribute to his campaign, distribute his literature, and tell everyone you know about his candidacy.

(3) We are involved in a spiritual battle for the souls of men, and the survival of Christian civilization, so please encourage people to read Brotherhood of Darkness, watch The Forbidden Secret, listen to my four- tape set, The Secret Behind the Secret, and pray for America because:

Back of all that foes have plotted,
Back of all that Saints have planned,
Back of schemes by men or demons
Moves a Higher, Hidden Hand.

Mysteries which hurt and baffle,
Past our power to understand
In the end are turned to blessing
By the Sovereign Hidden Hand. [21]

If you can help Radio Liberty financially at this time, it will be appreciated.

Barbara and I appreciate your faithful support, and your prayers.

Yours in Christ,

Stanley Monteith


1. www.usagold.com/gildedopinion/greenspan-gold.html
2. Personal communication with Ron Paul's press secretary.
3. www.mcclatchydc.com/227/story/18902.html: See also: Bob Chapman, International Forecaster. Interviews with Bob Chapman are available from Radio Liberty.
4. http://neworleans.indymedia.org/news/2007/09/11091_comment.php
5. www.cbsnews.com/stories/2007/03/01/60minutes/printable2528226.shtml
6. www.usagold, op. cit., p. 26.
7. Ibid., p. 27.
8. Ibid.
9. Ibid.
10. Personal communication: op. cit.
11. www.321gold.com/fed/greenspan/1966.html, p.1.
12. Ibid.
13. Ibid.
14. Ibid.
15. Ibid. p. 1-2.
16. Ibid., p. 2.
17. Ibid.
18. Ibid.
19. Ibid.
20. Ibid.
21. "The Hidden Hand," by Arthur T. Pierson

Return to Radio Liberty home page

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