TheBookkeeper

Gold Pressure Is Near a Breaking Point

Alan Greenspan Oct 2, 2008, Sandra Day O’Connor Project Conference:
"During the past year, lack of trust in the validity of accounting records of banks and other financial institutions in the context of inadequate capital led to a massive hesitancy in lending to them. The result has been a freezing up of credit.... trust will eventually reemerge as investors dip hesitantly back into the marketplace. From that point, history tells us, financial and economic revival sets in. I suspect it will be sooner rather than later. In either event, human nature being what it is, revival will come. It always has in this society governed by that remarkable document we call the Constitution of the United States."

Even if gold goes to $20K an ounce, if our world is to be safe to live in, our society must resolve the state of ignorance held by countless Greenspans who said: "During the past year, lack of trust in the validity of accounting records of banks and other financial institutions"

In fact "bank records" are not "accounting records." Accounting is a business strategy played subject to the rules of double-entry book-keeping. If banks today were using a proper double-entry bookkeeping framework of rules their "books" would be easily auditable and transparent. Greenspan's problem, and countless others, would disappear. .

Whatever happens to gold as the dollar fails will not take the place of society's need to return to a proper practice of double-entry bookkeeping.