In part one, I recounted Alan Greenspan's one on one interview with Gary Alexander.  Later in the day Saturday, Alan Greenspan was part of a round table with Porter Stansberry and Dr. Marc Faber, moderated by Mr. Alexander.  While both Stansberry and Faber had a couple of good "zingers" for Mr. Greenspan early on and they both had good points and additions to the discussion, I want to concentrate on what Alan Greenspan had to say.  Before getting to part 2, I do want to make one correction to yesterday's piece.  I heard Mr. Greenspan's reply to the question "where will interest rates and gold be five years from now?" as "higher...considerably".  I have been corrected several times, his exact word was "measurably", I apologize for the misquote.

  If you remember, in part one Alan Greenspan told several white lies.  One regarding the leasing of gold by central banks, the Fed never speaks with the Treasury regarding debt/deficit levels, while another was diverting the blame for the housing crisis to Fannie and Freddie amongst other factors...but not the Fed.  The key from GATA and the gold community's point of view was Greenspan's denial of gold leasing and the question "do you recall testifying before Congress where you stated central banks stand ready to lease gold in increasing quantities should the price of gold rise?".  This question by Gary Alexander was flubbed miserably and we may never get this opportunity again, I will finish with what and "how" I think it happened but first I'd like to lay out what the former chairman had to say.

  While Mr. Greenspan spoke of many topics, there were too many and some even irrelevant in my opinion to recount them all, the following is what I found important.  The talk began with the topic being "the savings rate".  Alan Greenspan went back to his old spiel of "productivity" and said that the system of entitlements was crowding out savings.  He used an equation of "more benefits=less growth" and there is no way out or around this, we have been eating our seed corn.  I agree as it is the common sense which is so "un"common in Washington but I guess one must leave the beltway before it hits them in the forehead?

  Next, the conversation shifted to government spending.  Greenspan continued his attempt at cleansing his legacy by saying "it's Congress's fault for spending, the Fed HAS to buy Treasury debt or else interest rates will explode".  Gary Alexander then asked him "so you are saying the Fed is not independent?" and the reply much to my surprise was "I never said it was independent".  Before going any further, I think this point is important for several reasons.  First, why should interest rates explode if the economy is self sustaining and government is spending within its means?  Was the economy (and Treasury) being bottle fed even all those years ago through the late 80's and 90's?  What would have happened if the Fed was not so accommodative?  Higher savings, less debt, a lower standard of living then but a higher one in the future?  Would any of the bubbles have been blown and subsequently popped or would we have had lower yet more sustainable growth?  I think we all know the answers to this.

  The question of China's growth was next, Greenspan called it "phenomenal".  He said much of the growth was due to "stolen technology" and that productivity would necessarily be slowing in the future.  He touched on the "shadow banking" system within China and suggested it to be a huge problem, as you know, I have harped on this topic for quite some time myself.

  The next question was very interesting, the panel was asked what will happen to the Fed's $4.5 trillion balance sheet with QE winding down, what will Fed policy be?  Porter Stansberry was quite blunt and said there is "mathematically no way out" (does this sound familiar to readers?) and that we will live with QE forever.  Faber agreed and added that real interest rates would have to remain negative indefinitely.  He added that central banks all over the world have "distorted" financial markets and QE cannot be withdrawn.  Alan Greenspan took a pass on this one and posted a "no comment" as he said Paul Volcker never spoke publicly or second guessed him while chairman and he would do the same.  He did say "the Fed is very smart" and they know everything "we" do.  What was really interesting to me was when he added that "a lot of money can be created until everything blows up".  He talked again about how huge bank balance sheets are the kindling wood (he used the word "tinder") for hyperinflation if and when velocity does pick up..."no one can forecast 5 years out".  I guess my question to him would be as follows "could banks carry such huge balance sheets if the Fed did not facilitate it with blowing their own balance sheet past the moon and then offering a free 1/4% interest to any bank willing to play"?  Mr. Greenspan was given a pass here in my opinion.

  Porter and Marc were then allowed to ask Mr. Greenspan one question each.  Sad to say the two questions were somewhat soft and certainly NOT what I would have asked.  They asked "you have said that bubbles are very hard to spot, are we in one now?" and "would you do anything differently now if you had the chance?".  Greenspan's answer to Porter was pretty much the "non speak" gobbledygook he used to play for Congress.  He talked about commercial real estate being dead for years and now rising on very low volume which is a real potential danger. He also said stocks are valued "average" historically and that much current and future economic demand has been eliminated.  Importantly, he did add that much future demand has been pulled forward and thus now eliminated.  This is an important admission in my opinion, he was saying that easy money works for today rather than tomorrow.   

  He replied to Marc Faber by saying again "bubbles are very hard to spot" and that "no one" has been able to forecast the timing of a bubble bursting except by accident.  When I heard this I just started laughing out loud!  I must be "no one" because in late 2006 I left a very high paying job, sold my real estate, shipped my gold outside of the country and packed my family up to leave the country.  Did I do this on a whim?  No, I saw what was coming, I wrote about what was coming (it is still all archived as proof) throughout 2007 and 2008 and was surprised it took as long as it did.  I must admit that what I did not see coming was the Treasury and Fed's response by bankrupting themselves to prolong the game.  This is a story for another day but hearing "no one" saw it coming is laughable as I can name more who saw it coming than I have fingers and toes to count them on ...it's just that they were not on CNBC or visible via other mainstream media pabulum for the public to see.

 As for the very last question, it was supposed to have been regarding his testimony to Congress in 1998 where Mr. Greenspan said "central banks stand ready to lease gold in increasing quantities should the price rise".  Gary Alexander substituted "buy" for the word "lease" which obviously changes the meaning and allowed Greenspan to truthfully say "No, I don't recall that".  I know that many believe Mr. Alexander let Greenspan off the hook and did not want to embarrass "the Maestro", I disagree.  I watched as Alexander furiously tried working his IPad, he had been e-mailed the quote 4 days earlier by Chris Powell and others and then again "re" e-mailed between sessions so the question could be asked.  This is where "caveman techniques" would have worked better using a pen and piece of paper, he could have simply stuffed it in his shirt pocket ...ready for use.  He (we) dropped the ball.  I saw it with my own eyes and believe it was an honest error, one that may never be corrected and could have had very significant historical ramifications but it is now water over the dam.  Alexander held two good interviews where he did not serve up softball questions and did actually get some truthful (and surprising) answers.  The problem as I see it is this question could have opened many cans of worms for the cartel as it is at the center of the suppression scheme and thus one of the core supports to a fraudulent fiat financial system.  As I said, I believe it was an honest mistake but a mistake of epic proportions in the scheme of things.

BILL HOLTER, Associate Writer, Miles Franklin Precious Metal Specialists

Address: 801 Twelve Oaks Center Drive, Suite #834, Wayzata, MN 55391;

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Prior to joining Miles Franklin in 2012, Bill Holter Worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards.  Later, he left Wall Street to avoid potential liabilities related to management of paper assets.  In 2006 he retired and moved to Costa Rica where he lived until 2001 when he moved back to the United States.  Bill was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-2012.