Wednesday, July 20, 2011

LOL, Paul Krugman's Gold Conspiracy Theory

Never underestimate the absurd arguments that Paul Krugman will make in a post. This is his latest. He quotes The Streetlight:
It’s also conceivable that a good advertising campaign by gold producers could be enough to move the price of gold.
Yup, that's it. The fact that U.S. debt continues to explode, that Portugal, Greece, Italy, Ireland, Spain, Chicago and California are all on the financial edge have nothing to do with it. That Bernanke is printing so much money that the country may run out of green ink, has nothing to do with it. Gold is going up because of an advertising campaign. But what advertising campaign? Krugman has that figured out also:
Surprisingly, though, Kash doesn’t say explicitly that this parallel [with a DeBeer's diamond campaign] is not at all hypothetical. Glenn Beck was financially intertwined with Goldline, and therefore had a financial stake in pushing fears of hyperinflation. And he had many, many viewers. So there was a direct channel through which conservative Americans were being pushed into buying gold.
Yup, that's it, Glenn Beck is the cause of the soaring gold price, except for a few problems with Krugman's theory. Goldline was hustling buyers not into the gold market, but into numismatic gold coins. According to Peter Schiff, these coins were way overpriced. Anyone calling up Goldline to buy gold wasn't pushing up the gold price, he was pushing money into the pockets of Goldline owners and sales people.

But, here's the biggest problem with Krugman's Glenn Beck-Goldline driving up the price of gold conspiracy theory. Beck hosted Glenn Beck from January 2009 to June 2011 on the Fox News Channel. Got that? The Glenn Beck show started in 2009. When did gold start its current climb? Gold bottomed in September 2, 1999 at $253.15 at the start of January 2009, when Beck's show started, gold was trading at $874.50. Got that? According to Krugman's theory, this entire long gold buying spree that started in 1999 is the result of a gold campaign started by Beck in 2009.

Krugman concludes: 
Market prices almost always tell you something useful. But sometimes what they tell you is that there’s a marketing scam in progress.
Krugman is correct here. Prices can tell you something, but generally not as clearly as what the history of gold prices is telling us about Krugman . He is spewing stuff out at NYT and is completely oblivious to the facts. He's a total hack with an agenda, damn the facts. If there is a marketing scam going on, it's being run by NYT in publishing this guy's commentary as serious work.


  1. This comment has been removed by the author.

  2. It's a shame Krugman doesn't post his portfolio. I'd love to see what he has hiding in there.

  3. This is my first and hopefully only comment on Krugman.

    He's a living example of the observer bias at work.

  4. Now Wait a Minute! Little-Statist-Runt Paulie Krugman might be on to something here! I saw a bumper sticker the other day that read: "Got Gold?"...It made me want to go right out and purchase all the gold in the world and there wasn't even a picture of a naked supermodel to convince me either!

  5. I'm with Joe....too bad there's no way to force him to disclose his investments on some ethical basis....then at least we could use the force of gov't for something good.

    It's weird how traders can get slammed for "pump and dump" but assholes like Krugman can get by misleading the sheeple of the world with no repercussions.

    Hell, even some Fox news anchors have qualified their commentary by listing their's only right Krugman do the same.

  6. I'm afraid I have to side with Krugman on this one:

  7. @Wenzel

    One could make an argument that after 2009, when the hedge-fund community outside goldbug circles got into the action and the MSM started running ads, some of the price movement was manipulated upward (rather than down) by interested parties.

    OK. Nonetheless, there was real demand/supply at work:

    1. Central banks becoming gold buyers in that period, which was the decisive factor in keeping the price level above 1100. Until then, they were net sellers.

    2. There was massive money printing, which pumped up the stock-market and gold with it..

    Coin scams are just diversions played out on top of that.

  8. This tells me all I need to know about what the price of gold is communicating:

  9. Krugman seems like a goofy fellow.

  10. Rumor has it that they give Nobel prizes for "goofy"...

    Brings to mind that old adage "I like to see the world from his prospective, but I cant seem to get my head that far up my own ass."

  11. What would we do without Krugman entertainment?

  12. The Glenn Beck show corresponds exactly with an increase in the price of gold. Gold decreased throughout 2008 - it looked like it had topped. Jan 2009 it took off in a fast rise that lasted till midsummer 2011. Jan 2008 to June 2011 - exactly like Beck.