Why
Governments Hate Gold By By: Ron Paul |
Mon, Jun 7, 2010
This
past week several emerging and ongoing crises took attention
away from the ongoing sovereign debt problems in Greece. The
bailouts are merely kicking the can down the road and making
things worse for taxpaying citizens, here and abroad. Greece
is unfortunately not unique in its irresponsible spending
habits. Greek-style debt explosions are quickly spreading
to other nations one by one, and yes, the United States is
one of the dominoes on down the line.
Time and again it has been proven that the Keynesian system
of big government and fiat paper money are abject failures
in the long run. However, the nature of government is to
ignore reality when there is an avenue that allows growth
in power and control. Thus, most politicians and economists
will ignore the long-term damage of Keynesianism in the
early stage of a bubble when there is the illusion of prosperity,
suggesting that the basic laws of economics had been repealed.
In fact, one way to tell if a bubble is about to burst is
if economists start talking about how the government and
the Central Bank have repealed the business cycle.
The truth is the laws of economics are constant and real,
no matter how inconvenient they might be to politicians
and bankers. This reality is setting in and the bills are
coming due. In the mean time, countries that have no money
have bailed out other countries that have no money, except
for the phony money created by politicians, bureaucrats,
and their partners-in-crime at the central banks. This may
be preventing big well-connected banks from having to take
on massive losses, but it is all at the expense of the taxpaying
citizen.
As governments and central banks continue the cycle of
spending and inflating, the purchasing power of their currencies
is constantly being degraded. These currencies are what
the people are working for and saving. This inflation guts
the savings and earnings of the people, who have very limited
options for protecting themselves against these ravages.
One option is to convert their fiat currency into something
out of reach of central banks and government spending, such
as gold or silver.
It is fairly typical in the midst of economic crises like
these for gold to come under attack from Keynesians economists
and their amen corner in the media. The arguments against
gold are usually straw men, based on a fundamental misunderstanding
of the purpose of buying gold. Gold is not a typical investment.
It is a defense against the predictable behavior of governments
to debase a fiat currency under its absolute control. The
people who run the printing presses have trouble shutting
them off. In order to limit one's exposure to this reckless
behavior, it is wise to exchange unsound assets for sound
ones.
As the foundation of their power, their fiat currency,
is rejected or avoided, government power is compromised.
Fiat currencies trade the people's freedom and security
for the government's freedom to squander the wealth of the
nation on wasteful pet programs, wars, and corruption. This
is why the freedom of the people is so intertwined with
a sound monetary unit. This is also why the founders liked
gold and silver, and supporters of big government hate them.