Paul Krugman’s last two columns have been about the obsession of conservatives (especially libertarians) with gold backed currency. On Friday, he wrote, Lust for Gold. In it, he discussed the recent fall in the price of gold and how it will not affect the way that goldbugs think about the commodity. And then on Monday, he wrote, The Antisocial Network. In it, he wrote about Bitcoin and how its proponents are basically obsessed with the same thing that motivates the goldbugs: “The government is devaluing my money!”
Then yesterday, Wall Street analyst Barry Ritholtz wrote an amusing article about the culture of the gold devotees, 12 Rules of Goldbuggery. Basically, he says that goldbuggery is a cult. People who are members of it are (like so many things that are political in nature) not responsive to evidence. The 12 rules come down to this: the price of gold can never go down and if it does go down, it isn’t economics, it is government manipulation.
As regular readers know, I used to be a libertarian. But even at my most fanatical, I never understood the gold standard obsession of the movement. (Actually, there were a lot of other things I never understood.) It was all based upon a kind of paranoia that the government was just itching to devalue the currency to impoverish the money of rich people. That’s a shocking claim when you consider the the government is run by a bunch of rich people. And that’s even more true of the Federal Reserve. In theory, it is supposed to maximize employment and minimize inflation. In practice, it minimizes inflation.
There is another side to the gold standard obsession—one that is a lot harder to understand. These people think that the value of gold is fixed. I think this is standard conservative thinking that the way things have long been is the way things ought to be. You see this all the time with the “under God” phrase in the Pledge of Allegiance. Many conservatives I’ve talked to will simply not accept that it is a fairly recent addition or that if it wasn’t always there, it should have been. In other words: whatever the world was like when I was a kid is what is right. So with gold, conservatives have this idea things must have been perfect in the long ago past because currencies have “always” been based upon it.
The truth is that gold is not that useful a metal. And its supply can certainly be manipulated. I remember reading about a king of what is now more or less Chad. This is many hundreds of years ago. He took a trip to the Middle East. In the process, he spread so much gold around the it created a years-long inflation shock. But we don’t have to go back that far to show the instability of gold. Since August, the price of gold has gone down 25% (most of that in the last week). In that same time, the dollar has been quite stable and inflation has been moving at about 2% annually.
The fundamental problem is that a gold-based currency is valuable only in as much as people think that gold is valuable. And this is the same thing as for so called fiat money. Think about it this way: what would you rather have: part ownership of Samsung that is actively exchanging products for other valuables or gold that very few people want? The truth is that gold is not much more valuable than tulip bulbs. In the end, you can’t build houses with gold and you can’t burn gold for energy and you can’t eat gold. So the belief that gold has intrinsic value is just wrong.
If you were preparing for life after some horrible tragedy, would you hoard gold? Of course not! You’d hoard food and batteries. I just don’t get why the goldbugs don’t see that this fact destroys their arguments that gold has some intrinsic and stable value.
Juliet Lapidos at Taking Note reported yesterday on
It is indisputable that the United States engaged in the practice of torture. That’s not what I say; that’s according to the nonpartisan, independent review performed by the
Blue Texan over at Crooks & Liars brought my attention to the following
There is a bit of economic news today that is wonderfully fun and I dare say it would be a shame for you all to miss out on it just because you don’t follow the economics blogs. What’s more, in terms of truth, it really matters, even if, in terms of politics, it probably won’t.
Last night, I tried to
I am not much of a sports fan, but I do rather enjoy watching the game of baseball—although I would rather watch the minor leagues. But one argument I get into with sports fans (and non-fans) is the supposedly unreasonable player salaries. This is nonsense. And I take particular umbrage at the fact that people almost never complain about the stratospheric profits made by the owners in the congressionally mandated professional sports monoploies. The truth of the matter is that if a pitcher is paid $10 million, it is because the owners believe (quite rightly) that he adds more than that to the profits of the franchise. What’s more, there is a long history in professional sports (Especially baseball!) of owners depriving players of their rightful participation in the profits they create.
I always have a strange and some would say heartless view of tragedies like the Boston Marathon bombing. It is not that I am not engaged by such events. Rather, it is that I feel that it is wrong to elevate such events above the tragedy that we allow day after day. If this is like most days, 25 people were murdered throughout the country. Countless others were badly injured because of violent acts. I don’t think any of these are more or less tragic, although obviously I would if any of them directly affected me. If there is anything good about such events, it is that it reminds me (at least) of all the people harmed every day. Unfortunately, especially after Sandy Hook, I have come to think that as a nation, our only response will be to
Will sent me a link to this
What is audacious about hope? In general, I think the answer is nothing. There could be something. If you combine hope with a strong will and commitment, then it can be audacious indeed. But I’ve never gotten the idea that Obama means this. Instead, he seems to offer nothing more than the hope that we will all come together and sing Kumbayah. Sure, his perfect world is likely very similar to mine. But is he willing to fight for it? No.
Steve Stockman is a funny guy, but I am still compelled to go all pedant on his ass. A “fetus” with a gun could shoot it’s way out. After which it would be taken to a lab where it would be studied, very carefully.