Monday, December 23, 2013

Paul Krugman — Bits and Barbarism

Back in 1936 ... Keynes argued that increased government spending was needed to restore full employment. But then, as now, there was strong political resistance... So Keynes whimsically suggested ... the government bury bottles full of cash in disused coal mines, and let the private sector spend its own money to dig the cash back up. ..
Keynes ... went on to point out that ... gold mining was a lot like his thought experiment. Gold miners were, after all, going to great lengths to dig cash out of the ground, even though unlimited amounts of cash could be created at essentially no cost with the printing press. ...
Talk to gold bugs and they’ll tell you that ... governments ... can’t be trusted not to debase their currencies. The odd thing, however, is that ... such debasement is getting very hard to find. …
...we are for some reason digging our way back to the 17th century.
Economist's View
Paul Krugman: Bits and Barbarism
Posted by Mark Thoma

Edging closer to being in paradigm.


3 comments:

James said...

Off topic, although it does include gold bugs, this is quite an interesting paper about the formation of the Bank of England.

http://repository.upenn.edu/cgi/viewcontent.cgi?article=1011&context=phr

Bob said...

"Krugman's journey"
Sounds like an epic worthy enough to rival that of Moses.

googleheim said...

digging for gold means more gold is in the supply which means the gold buggers are digging their way to debasement too ... so there.