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How Much Gold Does George Bush Own?

I am not going to read George Bush’s memoir. But who I do read is Jim Grant, of Grant’s Interest Rate Observer. This weekend, I found a copy of Grant’s weekly report dated October 12, 2001. Although the Bush wars had not been invented, the housing boom in Florida had already been lined up like pins in a bowling alley. Gov. Jeb Bush, propelled by homebuilders and the Growth Machine, had been in office for three years. Insta-grow suburbs like Kendall and Wellington had already proven out. Demand seemed endless. It was all scaleable: from mortgage hucksters to local zoning changes in farmland and wetlands like the Everglades, to the state legislature and the Governor’s Mansion where “free” market fundamentalism ruled all week but Sunday. Florida was the test tube state, and it sucked.

On October 12, 2001 neither Rudy Guiliani nor John Kerry nor George W. Bush had a clue what lay ahead. But in Grant’s essay titled, “For Real Money”, he had an inkling. Grant is a student of economic history, and this is what he saw: “Wartime fiscal policy is beginning to be put in place.” And then he announced the next bull market in gold. (

“An economy so indebted as this one may prove hard to stimulate through monetary means, which boil down to the creation of credit on top of credit.” Here is what attracted Grant’s attention: “In conditions distinctly suboptimal, the Fed created upwards of $90 billion at the tail end of the banking week ended September 12… If paper money is so easily duplicated, what is it worth?”

The answer, of course, is less and less. Exactly what President Obama—inheritor of the worst economic mess since the Depression—got in Asia last week. I wonder if Tea Party activists have any answer to that, or simply to repeat as Florida senate candidate Marco Rubio did in endless rounds of TV ads toward his election, proclaiming that America’s star burns undiminished.

By January 2011, the Fed will have printed close to $3 trillion more in additional debt compared to which Grant’s concern about $90 billion seems… well… quaint. . “The system in place subsidizes and encourages risk taking and borrowing. Accordingly, leveraged financial structures and colossal debts abound. The gold standard failed by reason of its structure (perceived as rigid). The pure paper standard is failing on account of its lack of structure.”

The housing boom and subsequent mortgage fraud, with local deal-makers, lobbyists, newspaper publishers, engineers and politicians who couldn’t earn a living in the private sector trailing like a string of tin cans behind Wall Street’s profit machine, had not even started to roll. But eyes were gleaming. Karl Rove hadn’t even come up with “The Ownership Society” yet. If there was a Satan in their midst he would have rubbed his hands with glee and said, take as much as you can, as fast as you can because this is the time to make so much money that not even a Depression will dent your standard of living.

Grant brushed off the sale on Oct 12 2001 by the Bank of England for 20 tons of gold at a price of $280 an ounce, that fell back to $276. A bull market was coming. Last Friday, the price of gold closed at $1426.

ALAN FARAGO, conservation chair of Friends of the Everglades, lives in south Florida. He can be reached at: afarago@bellsouth.net

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Alan Farago is president of Friends of the Everglades and can be reached at afarago@bellsouth.net

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