'..Keynes and his followers saw the economic system as part of a mathematical-mechanical universe .. Keynes took the human out of "human action" and reduced the economic system to a machine..''For Röpke, however, Keynes's positivistic-scientistic method was an even more damaging part of his legacy. In a critique of Keynes, included in the final 1963 edition of his revised text
The Economics of a Free Society, Röpke pinpointed one of Keynes's most dangerous ideas. Keynes and his followers saw the economic system as part of a mathematical-mechanical universe, with economic activity being the product of quantifiable aggregates, such as consumption and investment, instead of a result of actions by individuals. Keynes took the human out of "human action" and reduced the economic system to a machine. Man became a mere social unit, merely reacting to changed conditions according to economic instincts.
Keynes's focus on the management of economic aggregates fed the hubris of modern economists by justifying their role as the keepers of the keys to the economic kingdom. Keynesian economists, making
Gross National Product their highest end, were advocating an economic variant of scientism. Such economism leads to collectivism, according to Röpke, because it uses government coercion to tax funds from individuals in the name of "growing the economy." '
- Shawn Ritenour,
Biography of Wilhelm Röpke (1899-1966): Humane Economist'..gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.'“An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense — perhaps more clearly and subtly than many consistent defenders of laissez-faire — that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.”
[…]
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.”
- Alan Greenspan,
'Gold and Economic Freedom', 1967 (
Market Observations – Stocks, Gold, Euro Area Charts, September 2nd, 2011)
'..the fact that it is increasingly indicating that the central planning experiment of the past four decades may be coming ever closer to a catastrophic failure, has many statist intellectuals up in arms.''Well, the 'hysterical antagonism' and the 'tirades against gold' are back in full force. We have already mentioned Nouriel Roubini's anti-gold hysteria, but other mainstream economists have begun to join in. This is no wonder – virtually
all modern-day mainstream economists are at their heart central planners. Most of them rely on the State for their funding and their services would likely fetch far less in the free market than they feel they are entitled to in their role as advisors to the ruling class. The fact that gold is currently signaling that the markets are increasingly disenchanted with the antics of said ruling class and its institutions, the fact that it is increasingly indicating that the central planning experiment of the past four decades may be coming ever closer to a catastrophic failure, has many statist intellectuals up in arms.
As one recent example consider e.g. '
Beyond the bond and gold bubbles' by David Malpass in the WSJ, which is a plea for the central bank to restore faith in the flailing fiat money system and as such at least acknowledges that central bank policy has been in error. Alas, while this is no doubt correct, the problem we have with this is that the author ultimately seeks to rescue the central planning idea instead of recognizing that the central bank-led fiat money system cannot be 'reformed'. He is a bit like Gorbachov trying to save communism by 'doing it right'.
Another hit piece has been published in (where else) the New York Times. In '
How to Deflate a Gold Bubble', Steven Davidoff first discusses the question of whether gold is a 'bubble' (reciting a litany of canards we have heard a thousand times over the past decade), and while he notes initially that one can not really tell for sure, he then seems to conclude that indeed, it must be a bubble, since he finally veers off into demanding a whole host of market interventions designed to bring the gold price down. In short, it is a proposal discussing how the 'authorities' might best go about shooting the messenger. What makes the article so disingenuous is that similar to Roubini's recent anti-gold frenzy, it suggests that the alleged 'bubble' might be as damaging and dangerous as the housing bubble or the Nasdaq bubble were. It should be obvious why this can not possibly be the case (
inter alia, hardly anyone seems to be invested in gold – the percentage of global financial investment assets devoted to gold is
less than 1% of all financial assets, with estimates ranging from 0.2% to 0.8% on the high side).'
- Acting Man,
Market Observations – Stocks, Gold, Euro Area Charts, September 2nd, 2011