Reader Stephen is wondering about Greenspan’s Stunning Admission: “Gold Is Currency; No Fiat Currency, Including the Dollar, Can Match It”.

It seems the Council on Foreign Affairs left out some key sentences in its transcript of A Conversation With Alan Greenspan.

The conversation is between Alan Greenspan and Gillian Tett, U.S. Managing Editor, Financial Times.

Missing Snip

Tett: Do you think that gold is currently a good investment?

Greenspan: Yes… Remember what we’re looking at. Gold is a currency. It is still, by all evidence, a premier currency. No fiat currency, including the dollar, can match it.

Question From Reader Stephen

Hello Mish

I am a frequent reader and would like to know what you think about the Greenspan news. In particular, how is it that a former head of the Fed can make a statement that gold outshines the dollar and it is not headline news. Rather, his remarks to that effect are expunged from the transcript.

Am I alone in thinking this is surreal?

What’s It all About?

Let’s step back a bit and ask what the conversation is really about.

The transcript shows Greenspan still attempts to absolve himself of blame for the housing bubble and the great financial crisis.

Contrary Indicator?

Secondarily, one has to wonder about Greenspan’s new-found liking for gold given that Greenspan was a contrary indicator for his entire career (For details see Maestro Memoirs).

I had a conversation along these lines with Pater Tenebrarum at the Acting Man blog last week.

Pater commented …

You often find retired officials suddenly espousing stances that are quite different from those they supported in their time in office. I think about a year ago, Greenspan said something even more important, and very true: he mentioned that before there was a Fed, the US economy experienced the strongest growth in its history during the gold standard Gilded Age. I recall that the press reports on this were tinged with bemusement, mainly because most people know nothing about history, least of all economic history. They all think economic history started in 1929.

Feeling Guilty?

For all his faults, it appears Greenspan knows the score.  I suggest the man simply has a mighty guilty conscience.

As for why none of this is big news … Yes, it is a bit surreal. Then again, gold has been entirely written off by nearly everyone. Anti-gold sentiment is likely at an all-time high.

The Council on Foreign Affairs may prefer to keep it that way, or perhaps there is some other explanation. They did include this snip.

TETT: I imagine right now, it’s because of a question mark hanging over the value of fiat currency, the credibility going forward. …

GREENSPAN: Well, that’s what I’m getting at. Every time you get some really serious questions, the 50 percent of the gold price determination begins to move. …

TETT: Right. Well, I’m sure with comments like that, that will be turning you into a rock star amongst the gold bug community. In fact, you’re probably trending on Twitter today.

Mike “Mish” Shedlock