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Gold and the Financial Crisis

Writes Godfrey Bloom, MEP:

I awoke on Saturday morning to a BBC TV interview with a ‘Professor’ of Business Studies giving her view on the financial crisis. She was a model for the academic chattering classes. The sheer enormity of misunderstanding bodes ill for the future for it is shared by politicians, bureaucrats and public service broadcasters alike. Her view was that we could be saved if politicians could stop squabbling and show ‘vision’. As though the whole mess we are in was not caused by politicians and their fellow crooks in central banking. She barely accepted the scale of debt and offered the solution of increasing debt, significantly. My head dropped into my hands when she cited the Roosevelt administration as the template. Possibly the most incompetent fiscal administration in the history of the USA (until Obama). The ‘New Deal’ extended the depression for an unnecessary 10 years. Why did she not site the Harding administration in 1920? Because she is simply ignorant of it. Presumably if she were a doctor she would recommend to an alcoholic a bottle of whiskey for breakfast.

Worse was to come in the shape of a Times leader on gold. Whoever wrote it, no wonder they are unattributed, had simply no idea why gold had soared in value. It claimed gold had hit $2,000 an ounce in 2008 (it did no such thing), also absolved Gordon Brown for selling the nation’s gold at rock bottom prices at a cost to date to the exchequer of over £30 billion. It followed the usual neo-Keynesian nonsense that gold is a ‘barbaric relic’, with no yield and therefore worthless save for jewelry. The writer also fundamentally misunderstood the flaws in returning to the gold standard at a pre Great War exchange rate. I sometimes wonder where they find leader writers. Let me explain to the fascinatingly stupid chattering classes which infest our press and media the reason for gold’s meteoric rise.

People have lost confidence in fiat currencies. It is government paper that is intrinsically worthless. It is degraded on a daily basis by out of control public spending on welfare addiction, money printing and borrowing. It is fiat currencies that have fallen rather than gold rising.  It is not markets that are wrong, markets simply reflect fact. Like pain in the human body it is a warning. When the Times absolves Brown of selling our gold it diminishes itself as a serious paper. The nation’s strategic gold holding is not ‘speculation’, selling to buy Euros was speculation. Our grandchildren will wonder at the Times article in history lessons of the future and marvel that Mr. Brown was not sent to prison for his extraordinary mismanagement of the nation’s finances over more than a decade.

We must return to hard money. We must show a commitment or markets will collapse further, the US dollar has fallen in purchasing value in the last 100 years by 94% or watch the price of gold rise further.

(Thanks to Patrick Barron)

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1:58 pm on August 23, 2011