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Something very
unusual recently occurred in financial journalism. If you are from or rely on
the mainstream western financial press as your primary means of being
informed – you surely wouldn’t have noticed – because this
‘oddity’ involved a real act of investigative journalism by one Lars Schall.
Mr. Schall is a German freelance journalist who noted an
‘old quote’ of former Federal Reserve Chairman, Paul Volcker.
Paul Volcker was the U.S. Treasury Department's undersecretary for
international monetary affairs from 1969 to 1974 and became Fed chairman in
1979 – a post he held until 1987. More recently, Mr. Volcker has been a
top economic advisor to President Obama. The quote that intrigued Mr. Schall was excerpted from Mr. Volcker’s memoirs and
published in The Nikkei
Weekly back on November 15, 2004:
"That day the United States
announced that the dollar would be devalued by 10 percent. By switching the
yen to a floating exchange rate, the Japanese currency appreciated, and a
sufficient realignment in exchange rates was realized. Joint intervention in
gold sales to prevent a steep rise in the price of gold, however, was not
undertaken. That was a mistake.”
Schall
wondered why Mr. Volcker – a man “widely revered” with a
reputation for being a serious inflation fighter back in the 1980s –
had never been questioned as to “why not rigging the gold market was a mistake."
So Schall decided to put the question [appended below] to
Mr. Volcker himself:
Dear Mr. Volcker;
On November 15, 2004, The Nikkei Weekly published the following excerpt from
your memoirs about the U.S. dollar revaluation that took place on February
12, 1973. You wrote:
"That day the United States announced that the dollar would be devalued
by 10 percent. By switching the yen to a floating exchange rate, the Japanese
currency appreciated, and a sufficient realignment in exchange rates was
realized. Joint intervention in gold sales to prevent a steep rise in the
price of gold, however, was not undertaken. That was a mistake."
As far as Chris Powell and I understand it, you are saying here that for the U.S. government
not to rig the gold market was a mistake.
Is this indeed what you want to say? If so, why was it a mistake? And do you
think the U.S. government has learned from that mistake ever since? In other
words: does the U.S. government intervene in the gold market from time to
time in order to support the dollar and other currencies against gold?
Furthermore, could you maybe explain to Mr. Powell and me how it would have
looked like technically if you would have undertaken such a "joint
intervention in gold sales to prevent a steep rise in the price of gold."
An answer from you, sir, for the public would be much appreciated!
Best regards,
Lars Schall.
To contact Mr.
Volcker – it took Schall more than a week. He
tried tracking him down / contacting him through associations which Mr.
Volcker is a member or is affiliated:
1] The
Group of Thirty
2] The
Trilateral Commission
3] The
White House
4] The
Council on Foreign Relations [CFR]
Finally,
Mr. Schall’s persistence paid off. On Jan.
26, 2012, Mr. Schall received this response [albeit
short] from Paul Volcker regarding American intervention in the gold market -
received via Anke Dening,
Volcker's wife and long-time assistant:
"Dear Mr. Schall:
"The quotation you cite is about
an event almost 40 years ago. It pertained to the possibility of speculation
in the gold market leading to exchange rate instability at a critical point.
"The U.S. has not, to the best of
my knowledge, intervened in the gold market for more than 40 years.
"Sincerely,
Paul Volcker."
The Significance of This
Volcker’s
words TODAY show that – despite President Nixon closing
the gold window back in 1971 – gold price action [speculation], or
perhaps better stated, PUBLIC PERCEPTION of GOLD - still underpins exchange
rates [ie. the sanctity of the U.S. Dollar as the
world’s reserve currency].
In addition,
Mr. Volcker’s statement that, “to the best of his knowledge, the U.S. has not intervened in the gold
market in more than 40 years” is a patent lie. Mr. Volcker was
Chairman of the Federal Reserve from 1979 – 1987. The Federal Reserve
Bank of N.Y. is named in official
U.N. documents as the “fiscal agent” for the U.S. Treasury in
matters relating to gold swaps with the Bank of England executed in 1981
– just 2 years into his reign as Fed Chairman.
This
underscores how vitally important gold always has been and continues to be in
monetary affairs. Financial luminaries like Paul Volcker STILL LIE to this
very day about their decades old nefarious activity in the gold market.
Sadly, the
incident documented above is only the tip of the proverbial ice burg.
We now know
that the U.S. has been involved in gold swaps since 1981 at the earliest.
From a public accounting sense – they first acknowledged their
existence back in May, 2007 [see James Turk’s account – contained
in article here].
Back in May
2007 the US Treasury quietly made a subtle change to its weekly reports of
the US International Reserve Position, which includes the US Gold Reserve.
This change was first made on May
14th, 2007. The May 14th entry – FOR THE
FIRST TIME - said the US Gold Reserve is 261.499 million ounces “including gold deposits and, if
appropriate, gold swapped” [emphasis added].
Why Governments Use Gold Swaps?
In a gold swap,
American gold [or gold believed to be held by America, gold yet to be mined
or possibly gold of a lesser quality than COMEX / LBMA good delivery bars]
could be pledged as collateral for physical, good-delivery, foreign gold
holdings which are then sold into the market to cap the gold price. Gold
swaps – when employed by the U.S. government – are a means of
DECEIVING MARKETS and CAPPING PRICES, thereby making the U.S. Dollar appear
more robust.
A History of Lies and Deceit
Back in 2001,
GATA discovered a reference to gold swaps – uttered by FOMC General
Counsel Virgil Mattingly - in the minutes of the January 31-February 1, 1995,
meeting of the Federal Reserve's Federal Open Market Committee and pressed
the Fed, through two U.S. senators, for an explanation.
Fed Chairman at
the time, Alan Greenspan, denied that the Fed was involved in gold swaps in
any way. Greenspan went so far as to produce a memorandum written by J.
Virgil Mattingly, in which Mattingly denied making any such comments. (See http://www.gata.org/node/1181.)
Alan Greenspan
is also on record, back in 1999 – telling Rep. Ron Paul UNDER OATH – that since the
1930s - the Fed is not involved, nor are they permitted to be involved in
the gold market:
1999 – Humphrey Hawkins Testimony
2/24/1999 – Ron Paul responding to Alan Greenspan
Dr. PAUL: Thank you, Mr. Chairman.
Mr. Greenspan, a lot of economists
look to the price of gold as an indicator and as a monetary tool. It has been
reported that you might even look at the price of gold on occasion.
Last summer on a couple of occasions
here when you were talking before the committees on securities and on
derivatives you mentioned something that was interesting. You said that
central banks stand ready to sell gold in increasing quantities should the
price rise, which I thought was rather interesting.
Then I followed up with a letter to
you to ask you whether or not our central bank might not be involved in
something like that, in the gold market. And
you did answer me and stated that since the 1930's the
Federal Reserve has had no authority to be involved with the gold
markets.
Mr.
Greenspan’s sworn testimony directly contradicts uncontested evidence
entered in legal proceedings – DOCUMENTING the
involvement of the New York Fed in gold dealings with the Vatican Bank circa
1975 – specifically, documents bearing the signature of none other than
[then] N.Y. Fed President, Paul Volcker:
 
It is a
shameful fact that luminaries can and do LIE about their nefarious,
subversive activity in markets which “ARE” the very foundations
of our monetary system. They do so ‘wrapped in the flag’
so-to-speak. They LIE to the press and they premeditatedly LIE
UNDER OATH to Congress – and they do so with impunity.
They LIE
because they do not want the notoriety that accompanies being the authors of
a system of FALSE VALUES which have undermined free market capitalism.
They
don’t act alone – they act in concert with their vassals –
fellow conspirators in banking, government and media - who help project the
appearance of authenticity on arbitrarily contrived, often counter-intuitive,
market outcomes.
It is the assignment
of FALSE VALUES – and the IRON CURTAIN of LIES and DECEIT maintaining
them - in our increasingly inter-dependent, global markets, which is at the
root of our global economic malaise. This is also the root cause of the
growing global resentment toward the Anglo-American Banking Axis.
Former Fed
Chairman Paul Volcker is well known, on-the-record, having
repeatedly declared gold to be "the enemy."
Respectfully,
Mr. Volcker – gold is NOT YOUR ENEMY.
The TRUTH is
your true enemy.
For anyone who
has recognized this subversion of free market capitalism for what it is
– and particularly to those who feel helpless and think that this can
or will go on forever – the world is and has been noticing. What the
rest of the world has not possessed – up until now, short of TOTAL WAR
– is a resolution mechanism to restore a modicum of honesty back into
international commerce.
Global Resolution Mechanism Being Pieced Together
This is why
countries around the world are increasingly announcing trade deals which
circumvent the U.S. Dollar settlement mechanism. The world community has
gained knowledge and understanding regarding treasonous financial acts
committed in America’s name against humanity.
Not surprisingly,
a new international court – one that deals specifically with financial
crimes against humanity – has been opened in The Hague, Netherlands. As
Bloomberg News
reported Jan. 15, 2012:
New Court at The Hague to Arbitrate in Global Financial
Disputes
Financial firms and investors in
complex cross-country disputes can turn to a new tribunal in The Hague, the
latest of six international courts in the Netherlands.
“National courts and ad hoc
arbitration until now haven’t succeeded in unambiguous, authoritative
jurisprudence,” Jeffrey Golden, chairman of the management board for
the new Panel of Recognized International Market Experts in Finance, said in
a statement. The arbitration and mediation service, known as Prime Finance,
will officially open today.
“This court can be used by large
financial institutions, such as banks and large asset managers, and
eventually also by states that have a dispute with financial
institutions,” Bernard Verbunt, a lawyer at
Simmons & Simmons in Amsterdam who specializes in banking and financial
services disputes, said by telephone.
The tribunal, at the Peace Palace in
The Hague, can call upon almost 100 experts to arbitrate or mediate in cases
involving derivatives and structured financial products.
The panel was set up by the World
Legal Forum following a meeting of lawyers, financial experts, regulators and
central bank representatives from the U.S., Europe, and Asia in 2010.
So while the
big wheels of international justice may move very slowly – they do turn
all the same. While the American banking and political apparatus has been
reluctant to right their wrongs – the world community has been biding
their time and planning. The really big question at this point is,
“when does America bottom out?”
Are You a Believer?
It was back in
April 2007 when Dallas Fed President, Richard Fisher, reminded us all that
the U.S. Dollar is a,
“‘faith-based
currency’ … like the euro, the yen, the
British pound and other currencies.” A so-called “fiat”
currency, “it is backed only by the federal government’s power to
raise the revenues needed to meet its obligations and by the rectitude of the
U.S. central bank.”
Sadly, the U.S.
Dollar’s gatekeepers have not shown themselves to be accountable or
worthy of the people’s trust.
Ruminating over
the answer to this question, “when America bottoms out,”
I’m reminded of a post by my compatriot and a true American Patriot,
Bill Rummel at the Charleston Voice. He recently
recounted the prescient words of Marcus Tullius
Cicero regarding the danger of internal subversion. In a speech to the Roman
Senate, as recorded by Sallust, Cicero said:
"A nation can survive its fools
and even the ambitious. But it cannot survive treason from within. An enemy
at the gates is less formidable, for he is known and he carries his banners
openly against the city. But the traitor moves among those within the gates
freely, his sly whispers rustling through all alleys, heard in the very halls
of government itself. For the traitor appears no traitor; he speaks in the
accents familiar to his victim, and he wears their face and their garments
and he appeals to the baseness that lies deep in the hearts of all men. He
rots the soul of a nation; he works secretly and unknown in the night to
undermine the pillars of a city; he infects the body politic so that it can
no longer resist. A murderer is less to be feared. The traitor is the plague."
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