For Greenspan, Gold Once Glittered

"First of all, that was written 40 years ago, and I was mistaken in part," Greenspan said in testimony to the committee. "I expected things that didn't happen. And, nonetheless, my general view toward the type of gold standard effect remains to this day. My forecast of what was going to happen subsequent to that period has proved, fortunately, wrong."

Greenspan went on to say that he didn't think "the central bank is facilitating the expansion of expenditures in this country" -- an assertion that Paul says is "preposterous."

"Congress could not get away with spending beyond our means year after year if we did not have a Federal Reserve System ready to finance it all by purchasing bonds with money it creates out of thin air," writes Paul.

Greenspan, through a spokeswoman, declined to comment for this story. The spokeswoman did, however, point to a passage in his recent memoir The Age of Turbulence: Adventures in a New World, in which he writes that he has "always harbored a nostalgia for the gold standard's inherent price stability."

Greenspan goes on to contradict his previous assertion that the Fed doesn't facilitate the federal government's deficit spending by writing that he long ago acquiesced to the prevailing view that the gold standard doesn't adequately accommodate government spending on welfare programs, or social safety nets like Social Security and Medicare.

"The propensity of Congress to create benefits for constituents without specifying the means by which they are to be funded has led to deficit spending in every fiscal year since 1970, with the exception of the surpluses of 1998 to 2001 generated by the stock market boom," Greenspan wrote. "The shifting of real resources required to perform such functions has imparted a bias towards inflation."