Gold, Liberty, Central Banking …
Sofware engineers tend to be drawn to liberatarian economics and I don’t believe that is a very original observation either. We know how complex software can get, so we understand how infinitely more complex an economy is. It is the ultimate conceit to think that anyone can “run” an economy, as central bankers attempt to do. Central banking and the manipulations of money have a subtle yet profound impact on individual liberty. The 20th century was the century of all manner of isms, and all of them shared the common disdain for sound money and the Gold Standard. Alan Greenspan said as much in his famous 1967 article Gold and Economic Freedom
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An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense-perhaps more clearly and subtly than many consistent defenders of laissez-faire-that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other. |
Yet, in what must be one of the ultimate ironies of our times, Alan Greenspan-the-libertarian-Ayn-Rand-acolyte presided over one of the most inflationist monetary policies ever. The world-wide housing bubble is his last and most dangerous legacy.
Ben Bernanke, the other Princeton professor that I am not so thrilled with, is going to take the fall for Greenspan’s mistakes. I don’t feel sorry for him, because Bernanke’s ideas in monetary policy are nonsensical, so he will richly deserve the failure that awaits him. I just feel bad for the fate of the rest of us, subjected to his monetary policy experiments.
Tim Iacono, a software engineer, writes a carefully researched, beautifully written blog http://themessthatgreenspanmade.blogspot.com - I am a big fan! In particular read his analysis of how the government understates inflation in housing and healthcare.
Net result: if inflation is properly accounted for, GDP is not growing at all. Not terribly surprising to those of us living in the real world, watching costs for essentials increase inexorably, but what does Bernanke care? His equations tell him all is OK with the economy … and there is no problem he can’t fix with a few more injections of the steroid [aka fiat money], which he has promised to drop from helicopters if necessary. Watch that gold price, because in times of distress the world turns to real money.
Coming from India, where gold is deeply embedded in the culture as a store of wealth, perhaps an evolutionary response to the millennia of invasions and depradations, I have an even better appreciation for gold. India, in spite of its extreme poverty, has enjoyed impressive peace and stability, precisely because of the role of gold. Even in the times of the worst plunder by the rulers, the common citizens had a way to protect the fruits of some of their labor. The world will see the value of gold yet again, but I just hope we don’t have to go through too bad an economic crisis to get there.