Smoking gun for covert Fed intervention

[Atash Hagmahani]

http://emsnews2.wordpress.com/2009/01/15/1961-top-secret-fed-reserve-gold-exchange-report/

James Turk's extensive commentary:

http://www.financialsense.com/editorials/turk/2009/0116.html

An important document buried in the Federal Reserve’s archives has been discovered by writer and researcher Elaine Supkis. This document is posted on her blog at: http://emsnews2.wordpress.com/2009/01/15/1961-top-secret-fed-reserve-gold-exchange-report/

The document, which is marked “Confidential”, is from the papers of William McChesney Martin, Jr., and this collection is held by the Missouri Historical Society. A scanned image of the original document is posted by the Federal Reserve Bank of St. Louis at the following link: http://fraser.stlouisfed.org/docs/historical/martin/23_06_19610405.pdf

Martin was the longest-serving chairman of the Board of Governors of the Federal Reserve System, and worked there under five U.S. presidents from April 1951 to January 1970. It was during his tenure that the dollar devolved from “as good as gold” to a perennially inflated fiat currency backed by nothing but government promises, which makes one ponder what could have happened to the dollar had Martin been an advocate of sound money dedicated to preserving the dollar’s link to gold. Instead, during his tenure the US Gold Reserve declined by nearly one-half from 633.2 million ounces to 339.5 million ounces, while M3, the total quantity of dollar currency, soared more than three-fold from $190.0 billion to $616.1 billion.

The author of this Federal Reserve document is not clear, but was obviously written by a senior staffer who was not only familiar with the Fed’s operation and that of the Treasury, but also well attuned to their policies and procedures. It appears to have been written by someone in the Federal Reserve Bank of New York, given the obvious familiarity and extensive knowledge of the writer with that branch’s trading desk that executes trades for the Federal Reserve and the Treasury, which explains why this document is so interesting and important.

It was written in April 1961, and the run on the dollar had already begun. It was becoming increasingly clear that the U.S. government was not managing the dollar according to the rules and the intended goals of the 1944 Bretton Woods Agreement. The dollar was being debased under Martin’s chairmanship, and as a consequence, gold had begun to flow out of the U.S. Treasury as dollar holders realized that one ounce of gold was worth more than $35, the fixed exchange rate then in place. By April 1961, the US Gold Reserve had already declined significantly from the beginning of Martin’s tenure to 498.1 million ounces.

[opsec]

http://www.financialsense.com/editorials/turk/2009/0116.html

The efforts to cap the gold price have one aim. It is to make the dollar look worthy of being the world’s reserve currency when in fact it is not.

Ok, so which currency would he suggest as being a better choice than the dollar for this purpose?

[Atash Hagmahani]

Laugh. Gold, of course!

[offdalip]

links to the above articles have not been found.............maybe cut and paste would be better next time so that the info is not lost?

We cannot assume/take for granted the internet or info will remain accessible in the future

[darwinslair]

you can find it searching for cached copies on the internet.


http://antioligarch.wordpress.com/2009/01/20/gold-manipulation-evidence-mounts/

[Mike]

Martin has been referenced on www.econtalk.org, but I don't remember which podcast. 

The feeling on the podcast was that Martin was responsible, but bowed to Presidential pressure.  Eisenhower hated deficits.  Kennedy wasn't mentioned.  Johnson hated restraints.

To realize in 1961 that the dollar was not "as good as gold" would have required extraordinary perception.

By 1965, it would have been apparent to the perceptive.

 http://www.time.com/time/magazine/article/0,9171,840572,00.html

De Gaulle v. the Dollar
Friday, Feb. 12, 1965

Perhaps never before had a chief of state launched such an open assault on the monetary power of a friendly nation. Nor had anyone of such stature made so sweeping a criticism of the international monetary system since its founding in 1944. There was Charles de Gaulle last week proclaiming that the primacy of the dollar in international dealings was finished, calling for an eventual return to the gold standard —which the world's nations scrapped 50 years ago — and practically inviting other countries to follow France's lead and cash in their dollars for gold. It was a particularly nettling irritant just as the U.S. was deeply involved in making some hard decisions about its monetary policy.

....

Comment:
There is a big difference between 1965 ad 2009.  DeGaulle was a brilliant independent thinker and realized what is obvious in retrospect.

Today it is obvious to everyone.  But who is independent enough to act on their convictions?

[Beeherder]

Ok, what if real money came into common use again? You know, silver and gold. I literally can taste in my mouth any metal I handle with my bare hands. I have learned to recognize copper and silver bullion because I have some and occasionally touch it. Something tells me this will not be sufficient should I every actually need to accept any PM in exchange for whatever.

What do you think of this guys ideas re: learning to spot fake money?

http://www.survivalblog.com/2009/05/letter_re_which_form_of_precio.html

BTW for those of you who haven't surfed by John Wesley Rawles site just hit the home button and have fun. I like the attitude her better but he has good info sometimes.

[opsec]

Rawles has a book out called "The Best of the Blog". Well worth the money.

[Atash Hagmahani]

I like the attitude her better but he has good info sometimes.

A few differences:

He is more concerned about a crisis situation, and I with long-term decline. We both worry about self-defense, but I probably worry more about long-term starvation as systems break down and most people lack the skill sets to know how to make a living in a failing economy. Too many people think that they can "head for the hills" without starving (for that matter, it's usually a bad idea to run for it; you'll become a refugee).

I respect his points of view, while we probably look at the same problems through different terms. I try to avoid getting caught up in other people's political agendas and "baggage".

[Beeherder]

Atash, you set the finest table I have ever had the pleasure of enjoying. Thank you!

Both you and Rawles have it right IMHO. James Howard Kunstler's book The Long Emergency postulates two possible collapse scenarios.

Scene 1, a fast and deep crash, lots of immediate pain with significant loss of life, long term adjustment and survival as a species. TANSTAFL

Scene 2, a long a lingering colapse continuing for decades, filled with half measures and totally insufficient changes, a belief that things will get better if we just hang onto our old ways and false realities. The real possibility that man will be no more. and again TANSTAFL

I don't particularly like either one of those scenarios but they both seem feasible to me. I prefer your approach in either case.

Thanks for doing what you do, you give me hope!

[Dame]

TANSTAFL:  long version pls

[Atash Hagmahani]

There Ain't No Such Thing As A Free Lunch

[offdalip]

The slide down.....it's gonna be a slow scenario of constant readjustments.


I come to that conclusion finally b/c this country has too many resources and money
to all of a sudden run out of ways and means to ameliorate the ongoing problems.

many hiccups and stop starts on the way down and maybe even soo slow (over a generation or two) we don't even see it. Or, the next generation will think that is the "new normal".

[opsec]

I don't see it that way at all. I really do think that this country and the world as a whole is in for a hard stop.

[Atash Hagmahani]

It will be hard worldwide. Some places worse than others. The really big "hard stop" is trying to retool a global economy for petroleum depletion.

Among other things, this means the END OF THE GREEN REVOLUTION. There is a real risk of starvation.