9:18p ET Tuesday, July 24, 2001 Dear Friend of GATA and Gold: What a day for GATA and the cause of a free gold market! * GATA's press release, written by GATA Chairman Bill Murphy, calling attention to the failure of the Federal Reserve and the Treasury Department to answer our recent questions, received good distribution on the Internet, including CBSMarketWatch.com. * The Internet site www.TheMiningWeb.com posted a major article by its writer, Tim Wood, acknowledging that the Federal Reserve now has a gold problem, created by its counsel's unbelievable assertion that he must have been misquoted by his own agency's secretariat, perhaps the most careful secretariat in the world, in those remarks about "gold swaps" undertaken by the U.S. government. You can find the Mining Web article here: http://www.theminingweb.com/ Here's the more detailed link for it: http://www.mips1.net/MGGold.nsf/Current/4225685F0043D1B285256A930064B5 AC?OpenDocument * At a hearing of the Senate Banking Committee, Sen. Michael Enzi, R-Wyoming, interrogated Fed Chairman Alan Greenspan about the Fed's decision to join the Bank for International Settlements and the BIS's seizing the shares of its private shareholders -- a central issue in the Reg Howe/GATA lawsuit against the BIS, the Fed, the Treasury Department, and the bullion banks. I'll append here a transcript of the Enzi/Greenspan exchange, provided by GATA's great friend Jay Taylor of Taylor Hard Money Advisers, publisher of J. Taylor's Gold & Technology Stocks newsletter. I'll also append an interesting Associated Press story distributed today about the care and efficiency of Federal Reserve meetings, since it tends to impugn Fed lawyer Virgil Mattingly's assertion that he can't remember talking about "gold swaps" at a Fed meeting six years ago and must have been misquoted. Let me close with a small reply to the suggestion by Tim Wood of www.TheMiningWeb.com that GATA should lay off our assertions of conspiracy and our likening the gold scandal to Watergate. Others have made similar suggestions. It's GATA's job to make them understand that a conspiracy to suppress the price of gold has actually been a matter of public record for three years now, certified by none other than Fed Chairman Greenspan himself, who, on July 24, 1998, before the House Banking Committee, and on July 30, 1998, before the Senate Agriculture Committee, said: "Central banks stand ready to lease gold in increasing quantities should the price rise." Since that time the only question has been how far this conspiracy extends. Pressed by GATA through Sen. Joseph I. Lieberman two years ago, Greenspan asserted that he had knowledge of the central bank effort to suppress the gold price not because he own central bank was part of it but because he had "perceived" what the other central banks were doing. Of course if the U.S. government has been involved in "gold swaps," as those inconveniently transcribed Fed minutes indicate, it takes two to tango, and that would be a conspiracy in itself. Further, what was the Washington Agreement if not an open effort by the European central banks to regulate the gold price, interfering with the free market? Anyway, since the chairman of the Federal Reserve board admits that there is a conspiracy to suppress the gold price, GATA should have the freedom to assert as much as it undertakes to identify all those involved with the conspiracy, its methods, its purposes, and its consequences. CHRIS POWELL, Secretary/Treasurer Gold Anti-Trust Action Committee Inc. * * * EXCHANGE BETWEEN FED CHAIRMAN GREENSPAN AND SENATOR ENZI, SENATE BANKING COMMITTEE July 24, 2001 Senator Enzi: Another international issue that has come to my attention and you and I have been corresponding about it and I appreciate all the information you have provided. It's about the Bank for International Settlements. And of course the private shareholders in the United States -- about 130,000 shares' worth are owned by mutual funds and private investors. And I'm kind of concerned about what is going to be done with those shares that are going to be repurchased and of course I am concerned about a price that appears to be below the fair value. What is going to be done with those shares and when will the Federal Reserve make a decision whether or not to buy or receive these private shares? Greenspan: Well, of course we are not involved as a purchaser or in any way with those shares. Our sole relationship here is the fact that we have two seats on the board for BIS, myself and the president of the Federal Reserve Bank of New York, Bill McDonough. We very recently joined the board on the grounds that it was increasingly our conclusion that it was in the best interest of the United States for us to be on that board after having for many generations decided not to be there. We consulted with the State Department, the Treasury Department, and a number of people on the Hill to be sure that they saw it the way we did and indeed that was the case. With respect to the individual share issue, this was handeled in a way that the best I could judge was reasonably sensible. They had a number of investment banks, reputable investment banks, try to make evaluations of what the appropriate price should be for those minority share holders and the same procedure that goes on in the private sector all the time. And while we've raised questions in the beginning and certain things got changed as I recall as a consequence, at the end we looked at the result as fair and voted in favor. Senator Enzi: It was my understanding that this was done so that the central banks would own all of the shares. Our central bank will not own any of the shares? Greenspan: We do not own shares and will not own shares. Senator Enzi: I'll be addressing a few additional questions on that that don't pertain to the economy but I do have a definite interest in it and think that it will have some effect on the economy so I thank you for your answer. * * * Fed Meetings: Greenspan Always Wins By Nancy Benac The Associated Press July 24, 2001 WASHINGTON -- The meetings start precisely at 9 a.m. Not 9:01, mind you. The suits are a sea of blue and gray -- pinstriped or solid, for the most part. The chairman wins every vote -- and it's not even close. Guided by such tradition and structure, Alan Greenspan assembles members of the Federal Open Market Committee around a 27-foot behemoth of a mahogany table eight times a year for the singular ritual of setting interest rates that can help shape the economy. "At certain intervals, and this is one of them, there is a strong feeling that the whole world is watching you, so that creates a certain amount of tension,'' says Alan Blinder, a former governor of the Federal Reserve Board, whose members are automatically part of the committee. "I was always nervous," admits Susan Phillips, another former governor. Even when the pressure is off, says Blinder, "the meetings are almost always very polite and formalistic." No pizza and soda here. Not even coffee, for that matter. Just gulps of water for those beneath the 23- foot ceilings and 1,000-pound chandelier of the Federal Reserve board room. And a largely dispassionate dissection of how best to nurture the nation's economic health. By the time a vote is called around 1 p.m., "if you have a metabolism like mine, you're starving," says Blinder, who served as vice chairman from 1994-1996. Finally, a buffet is served, with cold cuts, pickles, rolls and drinks. The power of the FOMC -- not to be confused with the Fruit of the Month Club, jokes Fed governor Laurence Meyer -- was on display this week when it voted to reduce a key interest rate by a half-point for the third time this year. Banks around the country immediately made corresponding cuts in prime lending rates, benchmarks for millions of consumer and business loans. Wall Street, which had hoped for a bigger rate cut, sent stock prices tumbling. The committee is a world unto itself. It is made up of the seven members of the Federal Reserve Board (there are two vacancies right now), the president of the Federal Reserve Bank of New York and a rotating selection of four of the 11 other reserve bank presidents from around the country. In all, about 50 Fed officials and staff members attend the closed-door meetings, but only the committee members vote. When Greenspan calls things to order, a green light goes on to signal that the tape recorder is rolling. One of the first items is the Chart Show - an economic update by a Fed official wielding colorful graphics. Next comes a staff presentation on the outlook. (Laid out in a green-covered book aptly known as the "Greenbook.") Then it's on to the two "go-rounds" -- the core of the meeting. In the "outlook" round, members discuss their own views of the economy. Bank presidents generally go first, their specific order determined by what Meyer calls the "wink system." "Each FOMC member winks at the deputy secretary when he or she wants to be put on the list of presenters," Meyer explained in a 1998 speech offering a peek inside the committee. Talk of macroeconomic indicators and the like is mixed with more earthy examples like surging snow-shovel sales during miserable weather and even a few telling stories from the members' own experience. Phillips, who served on the Fed from 1991 to 1998, remembers fellow governor Lawrence Lindsey -- now a top economic adviser to President Bush -- regaling members when he was turned down for a credit card from Toys R Us. There isn't much give-and-take in this round. Many members speak from a prepared text or outline. Chairman Greenspan usually just listens. After a much-needed coffee break in the anteroom, the group reassembles for the crucial "policy go-round." After a staff presentation on options (laid out in the blue-covered "Bluebook"), Greenspan leads off, letting members know his preferred course, followed by suggestions from the others. The outcome is a foregone conclusion -- Greenspan will win. Usually the only suspense is over whether there will be a vote or two in dissent. How does Greenspan do it? "He's informally sounded people out," explains economist David Wyss, a former Fed staff member. "He has a pretty good idea how everybody's going to vote." Even so, the meetings bring together different perspectives. "Minds can be influenced by what they hear from their colleagues," says Lyle Gramley, a Fed member from 1980 to 1985. Although there may be pointed disagreements, says Blinder, the discussion is orderly. Even members who disagree often vote with the majority unless they absolutely "can't live" with the decision, since a divided vote can unsettle Wall Street, he said. At times, Greenspan, known for his gentle hand in cajoling consensus, may have to implore members to stand with him for unity's sake. Fed watchers still talk about the February 1994 meeting, when most committee members wanted a bigger rate increase than Greenspan. "I've been on Wall Street since 1948, and I'm telling you I have a pain in the pit of my stomach," Greenspan told the committee in unusually blunt language. "I really request that we not do this. ... If we are perceived to be split on an issue as significant as this, I think we're risking some very serious problems for this organization." Greenspan prevailed -- on a unanimous vote. -END- ------------------------ Yahoo! Groups Sponsor ---------------------~--> <FONT COLOR="#000099">Small business owners... Tell us what you think! </FONT><A HREF="http://promo2.yahoo.com/sbin/Yahoo!_BusinessNewsletter/survey.cgi"><B>Click Here!</B></A><FONT COLOR="#000099"> </FONT><A HREF="http://us.click.yahoo.com/vO1FAB/txzCAA/ySSFAA/WfTolB/TM"><B>Click Here!</B></A> ---------------------------------------------------------------------~-> Your use of Yahoo! Groups is subject to http://docs.yahoo.com/info/terms/