Ankle-bite #2 Gold, Slider and the CrimsonGhost challenge:
As I say, Slider, to tattoo Crimson Ghost because of an argument that he did not make seems a bit odd, also a bit unfair, also, while I am at it, a bit unwise. He obviously is sympathetic.
A hint of advice: you don’t build coalitions by dumping on people who are on your side, and who are giving you support.
Just for the record, I too am sympathetic to what you have been saying of late. I totally agree that we are in an era in which the Political is going to be Primary. I totally agree that we are in dangerous times. I totally agree that what we end up with – in the way of assets and wealth -- is going to be what we are able to keep out of the hands of political goons. My personal opinion is that very likely we are approaching a moment when we go into a crisis with the one set of rules and come out of the crisis with a new set of rules. A new set of rules means new winners and, probably, some very serious, big time losers.
Is gold the answer?
I have been working on a piece, an essay, in which I am trying to get fixed in my own mind exactly what it is that I think about gold in particular, and about investing in general. Given the realities of the present age (i.e. the Primacy of the Political), where should I put my money?
Although not finished, I do have a draft. Some considerable amount of work is still needed, but it is far enough along to let me see where I am going to end up. To do the uncouth thing, and quote myself, here is some of what I am saying.
The form I have used is a series of questions and answers. I’ll pick up the story where I begin to think about what to invest in:
Q: Well, okay, but you still haven’t answered my question: what do I buy tomorrow?
A: Don’t think in terms of buying this or that asset. Rather, instead 1) accept that the price of assets is going to be heavily influenced by the actions of government -- which now means: “insiders,” “crony capitalists,” “inside the beltway types,” “K Street entrepreneurs.” You are not going to be able to see and trace with any degree of confidence the influences that affect the price of assets. As a result you are not going to know where the asset fits into the larger scheme of things, and therefore, what would be a reasonable price to pay for it. 2) Accept that wealth vulnerable to insiders IS NOT WEALTH but the illusion of wealth. In practice, wealth that cannot be protected should be thought of as an asset held in reserve by an insider until HE needs it. 3) Understand that your best interest is to link yourself with other human beings. This is going to be hard to do. Any link that you forge -- should it become strong enough to give you some real protection -- is going to set off a response among insiders that starts with nervousness, that rises to intimidation, that becomes aggressive, and that could very well end with murder. 4) Understand that economic paradigms -- even those of the Austrian School -- verge on irrelevance. Most of what we need to know about economics, as economics, that is to say, economics qua economics, is easily learned. On the other hand, what we need to know about political economy is vast, is important, requires accurate discernment not just of others but especially of ourselves.
Q: I still don’t know what to buy?
A: The general rule is that you buy what strengthens the fabric of the human networks in which you live.
Q: You are talking about personal networks -- family, friends, co-workers, neighbors ...?
A: Yes, exactly.
Q: What about traditional assets like gold? Should I buy some?
A: There is a place for gold. It is money.
Q: Are you a gold bug?
A: Meaning?
Q: Do you look to gold as a shield to protect you from the depredations and the stupidity of the goons now in charge of the entity in Washington.
A: I am, by that definition, a cautious gold bug.
Q: How so?
A: I like gold because of its history and simplicity. It is a cliché to say it but gold is an asset that is not a liability for somebody else.
Q: Gold’s price can be manipulated.
A: Rest assured, everything can be manipulated, including the price of gold.
Q: Are you comfortable with the possibility that it might be manipulated?
A: Who can be comfortable with manipulation, but, that said, it does not bother me inordinately that gold might be manipulated.
Q: Why?
A: All schemes involving manipulation break down sooner or later. In the meantime, in the case of gold, even if manipulated by insiders, the manipulations have to be simple because gold itself is simple.
Q: How so?
A: Either gold is in the vault at Fort Knox, owned by the current entity in Washington, or not. Either gold is leased out or it is not. If leased out, either it can be paid back only by the return of physical gold, or not. If somebody claims to selling gold but is selling paper, this can be and will be known sooner or later.
G: You take gold’s simplicity to be a good thing.
A: Yes.
Q: So, one thing I can do tomorrow morning when the markets open is buy gold?
A: Yes, provided you don’t expect too much from it.
Q: You’ll have to explain what you mean.
A: It would be a serious mistake to think that gold in and of itself affords much in the way of security or protection.
Q: What does give protection?
A: I have answered this question in many different ways. Nothing gives protection but other human beings.
Q: That’s very abstract: what should I invest in? Where should I put my money?
A: Just what you said a moment ago -- invest in your network, the fabric of relations in which you live, friends, family, neighbors.
Q: ...might not gold be able to help with networks....
A: Yes, yes, of course it might, which is why I am a humble gold bug. I say that we should get some or even a lot of gold if possible. But I immediately add that we should not lose sight of a fundamental truth.
Q: Which is?
A: Gold is not security. OTHER PEOPLE ARE. If gold turns you aside from the difficulty, the disappointment, the disgust, the anxiety, the anger, the fear, the pain, the numbing degree of patience that it takes to live in a moral order with other human beings, then gold is for you a deadly trap.
Q: I’ll have to think about that.
A: Do. And keep in mind that dealing with gold is ever so much easier than dealing with other human beings. |
