Thursday, June 24, 2010

The 21st Century Gold Rush: Fact, Fiction and Joe Weisenthal

By Andy Katherman

Business Insider columnist, Joe Weisenthal , recently published an opinion piece directed at the "gold bulls" and the "gold bugs". To say the least, Weisenthal and many of the mainstream "financial gurus" who regularly write pieces about gold and the economy lack the fundamental grasp of sound monetary theory.

Here are Weisenthal's primary arguments.

No country has ever lasted very long and neither has a monetary system based on a gold standard
"Greece has a gold standard [currency] of sorts"
"Going off the gold standard helped us out of our mess"
Let's start out by recognizing Weisenthal ignores the basic axiom individuals act to satisfy their ends by certain goals and means.

History and Austrian economic theory illustrates how individuals in a free society (as shown throughout history) voluntarily seek a gold standard. This runs contrary to the current situation where individuals are forced through coercion to accept "legal tender laws" which cause bad money to chase out good money, known as Gresham's Law.

"Money" is actually a commodity like any other good that derives out of barter as a means of indirect exchange. An example of this activity is when fisherman who wants to trade his surplus of fish for other goods such as wheat, corn, or other consumer goods.

Read the rest here.

3 comments:

  1. Has anyone every encountered a critic of the Austrian School who had the slightest familiarity with basic Austrian concepts? Something less than an understanding; a mere familiarity. I haven't and I've been searching for 37 years.

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  2. Thank you for the read. If the pundits are saying stay away from Gold, I buy. If the pundits say Buy Gold, I sell. Easy really, these mainstream shills could not even get the Sub-Prime call right when all along many of us were screaming in their face.

    All I can say is rememebr this phrase:

    Buy Buy Buy Bear Stearn's....Nuff said.

    Gold will be the last man standing.

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  3. Bob Robbis: "Has anyone every encountered a critic of the Austrian School who had the slightest familiarity with basic Austrian concepts?"

    Bryan Caplan. To my knowledge, he's the only honest critic because he's not just familiar with the concepts, but actually understands them. He doesn't mis-state an argument (by accident or otherwise,) like some. I disagree with practically all of his critiques, but he's not a hack or illusionist like say Krugman/Delong/Cowen. Of course, one of the reasons he's the best critic is because he is a former Austrian himself.

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