Economic behavior and conditions have changed so much in the last 50 years that it is hard to think straight about what is going on. There are too many unprecedented developments.
Way back about 1970, I read and reread Friedman and Schwartz, "Monetary History of the United States." I found it very convincing.
But what happened between then and 2000 was that productivity of manufactured items and commodities, including food, increased so rapidly that inflation subsided even as the money supply (U. S.) increased at rates that in the past had guaranteed inflation.
I am afraid that the 20-year period from 1980 to 2000 was such a huge economic boom period for the entire world that economists with Keynesian leanings (meaning 90% of them) concluded that more and more of the same would lead to better and better results, and that governmental management of world economies was possible and desirable. Management by directives, controls, and central planning in the communist systems was discredited, but management by inducements, incentives, and "stimulus," seemed to have been proven correct.
I think that we may therefore have entered a very dangerous period in which central banks try to intervene to prevent any temporary decline or even readjustment of economic processes, imagining that they have the power and wisdom to correct these things.
I can't do a thing about what the central banks are doing. I can't even get a letter printed in the local newspaper pointing out what they are doing. 99.5% or more of people in the United States cannot see any further into economic processes than what they see in the dairy department of the supermarket or at the gas pump.
But after ten years in which the price of gold has risen 300%, some people are beginning to see that gold can be a good thing to own. I have yet to hear anyone whom I know directly in person who owns gold, and I do not yet hear any of the conversations that one heard as long ago as about 1980 about what a good investment it was to own a house. I definitely did hear people talk somewhat smugly about how much their houses were worth. I hear nobody talking about how much their gold is worth. I did recently hear one person I know announce that he was thinking about buying gold. When I hear him bragging about how much his gold is worth, I will consider selling mine and trying to find something else to own. He did at one time talk about his Intel stock (refusing to listen to advice to sell it at its peak), and he seems to have got into Apple and does not want to sell any of that.
So, given the fact that all the world governments seem to have collectively lost their economic minds, I know nothing else to do for myself except to hang on to my gold and mining stocks. |
