The following is a message from Alan Greenspan’s “vaunted Federal Reserve” to the “Average Man.”  (Hat-tip to LeMetropoleCafe.com for the lead.)  (photo)

On January 17th, 1978, Federal Reserve Chairman Arthur Burns stated from the meeting transcript (emphasis mine):

“You know, the American public, in contrast to some or many of our politicians–perhaps most of them–is very deeply concerned about inflation. People all over the country have been asking themselves the question:

“What can I do to protect my family? What can I do to protect my children, my family, and myself against the ravages of inflation? And gradually the thought has evolved and is spreading rapidly that, on the negative side, putting money in the bank or a savings and loan account is no protection.

“Buying bonds, Treasury bonds or corporate bonds, is no protection. Buying common stocks is no protection. It used to be a major protection but it no longer is.

“Then what is left? Well, gold or paintings. But the average man cannot invest in gold; he doesn’t know how. It’s not something he’s accustomed to. Likewise with paintings.

“What will he turn to? Well, there is farm real estate, a remarkable record there. But the average man doesn’t know how to buy farm real estate. He realizes that location can make an enormous difference. But there’s one thing the average man is capable of doing. If he doesn’t have a home, he can buy a home. If he already has a home, he can buy another.

“The average man is also capable of judging neighborhoods. All he has to do is get into an automobile or walk and he can locate areas where the prospect of maintaining good conditions in the neighborhood or some improvement are pretty good over the next ten years or twenty years. People can do that. And they’re doing it in increasing numbers. It’s surprising to me. I hear it from college professors; I hear it from young people; I hear it from my own children.”

Frankly speaking, Chairman Burns is either something of a simpleton or quite the deceiver, much the same as I when I proved his current successor, Ben Bernanke is a liar in “Bernanke’s Great Lie – The “Gold Standard” and the Great Depression.”  Why?

Well, first please understand that our brilliant Keynesian economists created currency that is 100% pure DEBT. That’s right, the U.S. Petrodollar (and all other world currencies too!) is simply debt as I explained in gory detail here “The Money Matrix – What is a Dollar Bill Worth?“. All holders of dollars are technically debtors to the Federal Reserve, who kindly extended to you constantly depreciating currency-credit created with a pen and a flick of wrist in the form of Federal Reserve Notes.

By using these FRN’s – as is mandated by the force of decree (or by fiat) our nation’s legal tender laws – you are in debt to the Federal Reserve, which is a quasi-private banking cartel created by the bankers, for the bankers, as I describe here “The Money Matrix – Who Owns the FED“. Also, classifying the elite market of painting with gold is just plain ignorant. I do not know of a single central bank that holds “paintings” as an asset, but they ALL hold gold.

Furthermore, while Burns seems to sneer at the stupidity of the “Average Man,” it does not seem that he realizes that the “Average Man” is actually quite a bit smarter than he is. For you see, people have long realized that if they leave money in the bank over the long haul, the rate of interest they earn is much less than the rate of inflation. Although savings increase in nominal dollar terms, they lose purchasing power.

Back when gold and silver were in use as lawful and honest money** one could receive interest – in gold grams or silver grams – that had real value. Since these precious metals are scarce, their purchasing power tended to grow over time as the economy became more efficient at outputting goods and services. This was literally the invention of retirement, prior to this invention you typically worked until you died or could work no longer. This greatly expanded the leisure time of a society and is also why people back in the 1800s referred to this as the “miracle” of compound interest. (photo)

For the “Average Man” there have long been two escape hatches from the Keynesian and Fabian Socialist doom-economics. These were 1) the stock market and 2) real estate.  In recent times, this got so bad that people started to referring to “saving” money in their 401k equities and pension bonds, to “investing” in a home. People are now realizing that stocks and bonds are either speculation or investing, depending on your level of knowledge. Homes are “investments” of a sort – homes really are longer-term durable goods – but far too many American have really been speculating, not investing, as we now recognize.

However, despite reports of the economy’s “green shoots” – pardon my French but replace the “oo” with another vowel to summarize my thoughts – these two escape hatches have been firmly sealed on our sinking global economic submarine piloted by the FED and the Bank of International Settlements (BIS) in Basel, Switzerland. People trying to retire have seen their “savings” disappear, but hopefully will now realize that real “savings” are held in the form of physical gold or in a bank account…. or will the banking system also give way? I made a case for this here in “Off a Cliff with No Airbags: The FED Banking System Quivers in Fright“.

After Burns’s speech, the price of gold never went lower. In January 1978, the monthly close was $175/oz. In September of 1980, the monthly close reached $670/oz.  As GATA has painstakingly made clear from its’ long list of evidence, governments and central bankers have colluded to suppress the price of gold to make their own currencies look better.  Just as the London Gold Pool experienced momentary success and then perished in 1968, gold and its holders will win this war.

These days, the “Average Man” has a new defender who will never betray them to the immoral madness of the central bankers. This is my message.

The United States has reported the largest reserves – over 8,100 tons, but GATA (the Gold Anti-Trust Committee) reports these holdings may not exist as they are strangely reported as “Deep Storage Gold.” 

Congressman Ron Paul’s bill, HR 1207, the Federal Reserve Transparency Act, will audit the Federal Reserve, including our gold supply.  This week over 20 more co-sponsors joined, bringing the bill to 88 co-sponsors.

From my experiences of having lived in Shanghai, China for the past 3-4 years and having read the IMF reporting rules, I have the following comments:

1. China has a lot more gold than this doubling of their official reserves – for instance any state bank holdings are not reported to the IMF. One day the world will wake up and realize India and China possess a large amount of the gold in the world.
2. The timing of this announcement is, of course, an eco-political power play.  The gold price and the shrinking future spreads will be key to watch.
3. From 2006 through mid-2008 you could buy gold in the bank shops, and at banks, but this was fairly difficult to do.  In mid-2008, a massive propaganda campaign hit the major banks, with gold displays in bank lobbies and active advertisements.
4. Asian populations have a deep cultural appreciation and respect for gold as money, unlike most Americans.
5. China took over the title of world’s largest gold mine producer from South Africa last year.

As the integrity of the US banking system is compromised, private citizens should consider becoming their own central banks.  The days of irredeemable paper fiat currencies may be approaching its end, and there is a reason why the central banks hold gold – it is their default insurance.

Do not be fooled, the gold reserves of central banks are their actual Money.  Debt-based paper dollars, yen, pounds are all just ridiculous currencies, sad shadowy mirrors of their former selves, which is gold and silver coin.

So, got gold?