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Sunday, December 22, 2013

Paul Krugman, "Bits and Barbarism": Head of Gold, Legs of Clay

"Your majesty had a vision of a statue, very large and extremely bright; it stood in front of you and its appearance was terrifying. The head of the statue was of fine gold, its chest and arms of silver, its trunk and thighs of bronze, its legs of iron, and its feet partly of iron and partly of clay. As you watched, a stone separated itself without any human hand, struck the statue on its feet made of iron and clay, and broke them in pieces. Then the iron, the clay, the bronze, the silver and the gold were all broken into pieces which became like the chaff on a threshing-floor in summer; the wind blew them away without leaving a trace. But the stone which had struck the statue grew into a huge mountain that filled the whole earth."

- Daniel 2:31-35 

Surely you remember how Daniel interpreted for Nebuchadnezzar II, the king of Babylon, his troubling dream. Nebuchadnezzar II? Reigning from 634 – 562 BC, he created the Hanging Gardens of Babylon and destroyed the First Temple in Jerusalem. Daniel is said to have prophesied the conquest of Babylon by Cyrus, King of Persia, in 539 BC.

Today, is there another nation whose foundation has been undermined by its leadership? Let's get back to that in a moment. But meanwhile consider the value ascribed to gold by women and men some 2,600 years.

Of course, if you are a Nobel prize winner in economics, you are permitted to be ignorant of history, and in his latest New York Times op-ed entitled "Bits and Barbarism" (, Paul Krugman writes of gold and bitcoin:

"Talk to gold bugs and they’ll tell you that paper money comes from governments, which can’t be trusted not to debase their currencies. The odd thing, however, is that for all the talk of currency debasement, such debasement is getting very hard to find. It’s not just that after years of dire warnings about runaway inflation, inflation in advanced countries is clearly too low, not too high. Even if you take a global perspective, episodes of really high inflation have become rare. Still, hyperinflation hype springs eternal.

Bitcoin seems to derive its appeal from more or less the same sources, plus the added sense that it’s high-tech and algorithmic, so it must be the wave of the future.

But don’t let the fancy trappings fool you: What’s really happening is a determined march to the days when money meant stuff you could jingle in your purse. In tropics and tundra alike, we are for some reason digging our way back to the 17th century."

Mind you, I'm not saying that the human obsession with gold is rational, but as can be gleaned from the Old Testament (see also Genesis 2:12), this "bug" dates back to a time long before the 17th century, and habits are hard to break.

Imagine if the Federal Reserve Bank dumped its hundreds of thousands of gold bars into the ocean. Heck, America's health care system was trashed renovated almost overnight by Obama. Why not change the underpinnings of America's currency and watch what happens?

Yes, in what's left of his second term, let's see if the president, with the able advice of his beloved New York Times columnists, is able to construct a new edifice with legs of clay.

Daniel, where are you when we need you?

1 comment:

  1. Krugman is an illiterate, pretentious and pompous (a requirement at the NYT?) bozo. I pointed this many times when I was active in the NYT discussions. Then I gave up and went in search of intelligent people.