The Four-Letter Word
Jude Wanniski
November 17, 1998


Memo To:Richard Stevenson, NYTimes Fed reporter
From:   Jude Wanniski
Re:  In Greenspan’s Head

Your lengthy lead article in the Sunday Business section on what’s going on in the head of Federal Reserve Chairman Alan Greenspan is probably the best thing you’ve written lately on the complexities of U.S. monetary policy given all the mixed signals coming at our economy and the world economy. I read the two or three thousand words happy to know the Times had given a reporter of your stature and skill so much space in such a prime spot in the Sunday paper. Thus you can imagine my surprise when I got to the end of the piece without once encountering the word “GOLD.” Now I know the Times is a family newspaper, but it has run all kinds of text involving President Clinton’s shennanigans in the Oval Office, so I know you do not consider the word an “expletive deleted.” How come, then, you can rummage around as much as you did in the chairman’s grey matter and still not run across “GOLD.” My guess is that you knew before you began that you would avoid the topic, although it looms as large as a gilded elephant in the living room.

Now Rick, you have been around long enough to know that the chairman, for most of his 72 years, has been a gold guy. In other words, if almost any other phrenologist within a day’s ride of the Capital got his hands on Alan Greenspan’s noggin, the first thing he would find would be a lump of GOLD. In his 11 ½ years in the saddle, the chairman has at least 50 times told the House and Senate banking committees and the Joint Economic Committee of the Congress, not to mention various business gatherings, that of all the inflation signs that pass under his gaze, the golden one is more important than all others. Yes, he has lately mumbled something about gold not being as important as he once thought it was. That’s only because its dollar price won’t respond to a change in interest rates, and he won’t face the fact that he is responsible for the Asian crisis and the commodity price deflation that has wrecked a good part of the finances of the developing world. Russia, more particularly has fallen into a new depth of travail, as the dollar price of oil has been dragged down by the shortage of dollar liquidity. You mentioned the monetarist critics and how Greenspan thinks they might be wrong. You mentioned the Phillips Curve critics, and how Greenspan thinks they are probably wrong. Hey, what about the four-letter word?

It is my prediction that a few thousand years from now, when the archeologists dig in the layers that used to be our civilization, they will unearth a copy of the Sunday Times and in the Business section realize they were getting important insights to the brain of the most powerful man in the world, and how his policies contributed to the end of this civilization. Tsk, tsk. They won’t have a clue.