Economics Lesson No. 5: Where Lies Hope for a Solution?

If you have read the previous Economics Lessons, you may be saying to yourself, "If the US Government has decided that we don't need a measuring standard for our dollar, then that must mean it's not necessary anymore and we're fine without it." Hopefully, I can help you understand how all those academicians and politicians could commit such an egregious error as to declaim that we no longer need a money standard and that gold is an idea whose time has come and gone (a "barbarous relic," I believe was the term of one of the most egregious of them all, John Maynard Keynes.)

It's called ego. Ego has been the Achilles heel of more than one. I might even go so far as to conjecture that it is the downfall of all of us, even me. The sad truth is that our more learned leaders really don't have a clue, but have left their modest common sense at the doorstep of the Hallowed Halls of Power. The price for entering inside those doors is the abandonment their sense of awe and humility. They become so caught up with their image and with the daily rat race of preserving tenure and status and power that they lose the capacity to think straight and forget what it's like to live a normal life.

Take the example of Chairman Greenspan, at the Federal Reserve. From some of the older speeches of this learned gentleman, one can see his vast accumulation of knowledge and innate good judgment; however, the man has changed his tune since he acceded to a position of power. (See my article The God Must Be Crazy at the Tech Central Station website.)

Another example is Professor and Nobel Prizewinner Milton Friedman. Here is someone whose contribution to the field of economics is immeasurable; yet he remains an enigma. On the one hand, he champions such efforts as Hernando de Soto's defense of property rights in Peru (see this web page), and those of Michael Hodges, a sincere, concerned citizen who has spent thousands of hours compiling graphs that you and I can understand, to illustrate the very dangers I've been describing in my posts. At the same time, it is to this same learned Professor that we owe our Federal Reserve's present inflationary policies. Hard to comprehend.



A kind of irrational assurance (hubris) is typical of those who attain positions of status and power - or at least it's the excuse I can find for them; and encouraged by elitists such as these, most central governments today are handing their citizens an inflationary, pyramid-scheme bill of goods. I guess it's "Apres nous, le deluge!" (That was allegedly Louis XV's way of saying, "As long as the despicable masses allow us government officials to get fat and sassy with their money, to hell with them and their progeny!")

If you're asking yourself how things got this way, I'll explain it simply by saying that it is not totally their fault. We the electorate are the ones who have hired the naked emperors as our royalty; they are only doing what comes naturally, i.e. biting into the apple. The real cause of the predicament is our sheepish blind reliance upon frail spirited politicians and defective academic thinking machines as though they were gods, when in fact they are mere human beings just like Adam and the rest of us.

I'm hoping against hope that some country somewhere will reinstate sound monetary and banking policy, but they would do so at their own risk in today's competitive climate. The only country that might undertake that risk with relative confidence is the USA, but (1) it would require the collaboration of at least Europe and Asia, and (2) it would jeopardize the existing power structures. Both of these conditions mean it'll probably never happen - unless the house of cards comes crashing down and we have a financial crisis on our hands.