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Barbarians at the Golden Gate: Get Ready for the War on Gold
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“Auri sacra fames! Gold has its special glamour, its age-long appeal to the grasping palm, to those who would be safe and greedy at the same time. This may be an evil way in which to run our economic life.”
--John Maynard Keynes, 1933
Yesterday I walked into the largest Barnes & Noble bookstore in New York and saw a big display table up front with all kinds of books on John Maynard Keynes and Keynesian economics. One book, “The Return of Depression Economics,” was written by Paul Krugman, the New York Times columnist who just won the Nobel Prize.
Another book was called “The Case for Big Government,” by Jeff Madrick, the editor of Challenge magazine. I can understand writing a book in support of good, efficient, strong, and productive government, but “big” alone? Most Americans prefer the motto “cheaper and better.”
The biggest surprise at Barnes & Noble was to see my own book, “The Big Three in Economics,” (click here to order: http://www.amazon.com/Big-Three-Economics-Maynard-Keynes/dp/0765616947) prominently displayed along side all the Keynesian and Marxist books. It has suddenly become my most successful book.
Mine was the only book there that took a dim view of Keynes and Marx, and their solutions to the financial crisis (always more government, more taxes, and more regulations). For my money, Adam Smith and his followers (Ludwig von Mises, Friedrich Hayek, Milton Friedman, Murray Rothbard) deserves to be on top of the Totem Pole of Economics.
Unfortunately, Keynes is all the rage now. The British economist became famous in the 1930s for advocating going off the gold standard, running deficits and bailing out troubled banks with easy money as a way to end the Great Depression.
Keynes hated the “barbarous relic” and urged Britain to go off the gold standard in the 1930s (they followed his advice). He was one of the chief architects of the post-war Bretton Woods agreement that further removed gold as the lynchpin of global monetary stability.
Today’s politicians, from George Bush to Barack Obama, have suddenly become Keynesians during this financial crisis, spending money they don’t have in a vain effort to right the ship. Even Newsweek has gone so far to say, “We are all socialists now.” Alan Greenspan, the ex-student of Ayn Rand, now favors nationalization of the big American banks Citibank and Bank of America.
Every investor and gold bug should know the enemy--Keynes, the advocate of big government and the welfare state, and Karl Marx, the radical who advocated outright state socialism and total central control of the means of production.
After World War I, Randolph Bourne observed, “War is the health of the state.” Today he might say, “A financial crisis is the health of the state.”
Keynes himself warned about the danger of going off gold: “There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
As gold inevitably moves higher in price, and stock prices and the dollar fall further, the politicians of envy will speak out against the hoarders of gold and silver. They may not confiscate your gold, but they might dump Treasury gold on the market, or tax it heavily. Smart gold bugs buy their silver dollars and American eagles privately, and store it away secretly.
Best wishes, AEIOU,
Mark Skousen
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Mark Skousen is editor of "Forecasts & Strategies," http://www.markskousen.com/visitor.php?offer=10838 and producer of FreedomFest, the world’s largest gathering of free minds (freedomfest.com). His book, "The Big Three in Economics" is available from Amazon for only $17.31, plus shipping: http://www.amazon.com/Big-Three-Economics-Maynard-Keynes/dp/0765616947
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