Goodbye yellow-brick road
by digby
On a day when the financial news is all about gold, my thoughts inevitably turn to Ron Paul. If, like me, you have not spent years studying monetary policy, much less absorbed the reasoning behind his and Glenn Beck'sinsistence on returning to the gold standard, this well written piece on the issue (by a conservative critic, btw) explains it well. And he points, rightly I think, to why it's gaining traction, which should be a lesson for Democratic politicians if they choose to listen:
IF Representative Paul has been agitating for a return to gold for the better part of four decades, why have his arguments now begun to resonate more widely? One might point to new media—to the proliferation of cable-television channels, satellite-radio stations and websites that allow out-of-the-mainstream arguments to more easily find their audiences. It is tempting to blame the black-helicopter brigades who see conspiracies everywhere, but most especially in government. There are the forces of globalization, which lead older, less-skilled workers to feel left behind economically, fanning their anger with everyone in power, but with the educated elites in particular (not least onetime professors with seats on the Federal Reserve Board).
There may be something to all this, but there is also the financial crisis, the most serious to hit the United States in more than eight decades. Its very occurrence seemingly validated the arguments of those like Paul who had long insisted that the economic superstructure was, as a result of government interference and fiat money, inherently unstable. Chicken Little becomes an oracle on those rare occasions when the sky actually does fall.
Read the whole thing for the history of goldbuggery and the holes in Paul's thesis.
(This is interesting too.)
The way I see it, it's not so much that the good doctor's diagnosis is so wrong, it's the snake oil prescription. Sure, the Fed is too powerful, too obscure and too bound to protect the interests of the financial elites. But returning to the gold standard would actually make things much worse for average people.
But then, the goldbugs' obsession has little to do with economics and everything to do with ideology and politics. Libertarian ideology and politics to be precise, half of which is perfectly reasonable. It's the crazy, economic half that's the problem.
.