GATA Chairman Murphy rebuts defense of gold lending

Submitted by cpowell on 02:42PM ET Wednesday, April 7, 2010. Section: Daily Dispatches
5:41p ET Wednesday, April 7, 2010

Dear Friend of GATA and Gold:

The Huffington Post has posted an essay by GATA Chairman Bill Murphy in reply to an essay by banker Warren Mosler posted there this week asserting that central banks lease gold to earn money rather than to suppress gold's price.

Mosler's defense of gold leasing was practically the first to be repudiated years ago by central bankers themselves -- particularly by Federal Reserve Chairman Alan Greenspan in testimony to Congress in July 1998 and by William S. White, head of the monetary and economic department of the Bank for International Settlements in a speech at a BIS conference in Basel, Switzerland, in July 2005.

Greenspan urged Congress not to regulate derivatives, remarking famously: "Central banks stand ready to lease gold in increasing quantities should be price rise":

http://www.federalreserve.gov/boarddocs/testimony/1998/19980724.htm

White explained that one of the five major purposes of central bank cooperation is "the provision of international credits and joint efforts to influence asset prices (especially gold and foreign exchange) in circumstances where this might be thought useful":

http://www.gata.org/node/4279

Murphy writes that GATA doesn't object to gold leasing in itself but rather to the gold price suppression scheme for which leasing has been vastly overused. His essay is headlined "Our Response to Warren Mosler on Gold Lending" and you can find it at The Huffington Post here:

http://www.huffingtonpost.com/bill-murphy/our-response-to-warren-mo_b_528552.html

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.