Alan Greenspan on The Gold Standard
TL;DR
Alan Greenspan believes the gold standard is necessary to protect savings from government-induced inflation and confiscation.
Key Points
He argued that the abandonment of the gold standard enabled statists to use the banking system for unlimited credit expansion.
In 1981, he discussed a commission to study returning to a gold standard, while noting the obstacle was fixing a consistent gold price.
He stated in 1966 that gold stands in the way of deficit spending, which he defined as a scheme for wealth confiscation.
Summary
Alan Greenspan has historically maintained a strong conviction regarding the essential role of the gold standard as a protector of property rights and economic freedom. In his 1966 essay, he argued that the gold standard acts as an instrument of laissez-faire economics, making gold inseparable from economic liberty because it limits government's ability to expand credit indefinitely through deficit spending. He contended that without gold convertibility, governments possess the means to effect a hidden confiscation of wealth via inflation to fund welfare schemes, making gold the only safe store of value against this process.
Later in his public career, even after presiding over a fiat currency system, Greenspan revisited this theme, noting that the period before World War I under a gold standard was one of aggressive economic expansion, and suggested returning to it could resolve stagnation fueled by unchecked money supply growth. While he acknowledged the immense political and logistical obstacle of re-entry due to the vast overhang of fiat currency, his later statements suggested that a return to a pre-1913 style standard would solve current monetary woes, positioning him as a long-standing advocate for its principles.
Frequently Asked Questions
Alan Greenspan is a strong proponent of the principles underlying the gold standard, viewing it as a vital mechanism for preventing government-induced inflation. He argued in historical writings that gold convertibility limits fiscal imprudence and protects private savings from confiscation.
Yes, in more recent commentary, he has suggested that a return to the gold standard, as it existed before 1913, would resolve current economic stagnation caused by money supply increases. However, he acknowledged the immediate difficulty of re-entry due to the existing massive overhang of fiat currency.
Greenspan contended that in the absence of the gold standard, there is no way for individuals to protect their savings from being eroded by inflation. He viewed deficit spending, made possible by fiat currency, as a hidden form of wealth confiscation, which gold restrains.
Sources8
Gold & Economic Freedom - an Article by Alan Greenspan 1966
Alan Greenspan, Gold and Economic Freedom (1966)
Greenspan Warns Inflation Will Come, Time for Gold Standard is Now
"In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value." ~Alan Greenspan
Alan Greenspan, WSJ, 1981: “Can the U.S. Return to a Gold Standard?”
Greenspan and Gold
FRB:Speech, Greenspan--Issues for monetary policy--December 19, 2002
In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value.
* This is not an exhaustive list of sources.