Keynesianism has reached its natural extreme. The floating-currency status quo, in place since 1971, is becoming more and more intolerable. Before too long, the soft money fanatics will give way in disgrace, and the hard money traditionalists will begin to get the respect they deserve. We are already on the path to a new gold standard.
December 15th, 2010 | Nathan Lewis | 4 comments | ContinuedArchive for Nathan Lewis
Nathan Lewis is the author of Gold: the Once and Future Money, published by Agora Publishing and J. Wiley. He runs an investment fund in Westport, Connecticut.
Stimulus, Austerity, and the Spiral of Decline
“Austerity” usually means spending cuts and tax hikes. But, it does not take long before politicians, bureaucrats, public employees and corporate cronies all agree that they don’t actually want to cut spending. Usually, they take some unpleasant swipes at welfare programs and services – in other words, the only programs that actually do some good, and which are especially important in a recession.
June 25th, 2010 | Nathan Lewis | 2 comments | Continued
The Magic Formula of Economic Success
If you look at any of the great economic successes over the past two hundred years, you will usually find this combination. Likewise, most of the great failures have the converse: high (or rising) taxes, and unstable money.
August 14th, 2009 | Nathan Lewis | 16 comments | Continued
Citizens Easily Coerced into Using Government Currency
The best currency is the one that is most stable in value. Historically, the premier international currencies, whether the US dollar after World War II, the Dutch guilder in the seventeenth century, or the Athenian owl in the fourth century BC, were those reliably pegged to gold.
July 1st, 2009 | Nathan Lewis | 2 comments | Continued
Japan: A Morality Tale of Banks and Government Refusing to Deal With Debt?
This may puzzle some people. Wasn’t the Japanese economy roaring into a bubble in the late 1980s? Indeed it was – driven in part by the 300 basis point decline in interest rates that resulted from the soaring yen.
May 27th, 2009 | Nathan Lewis | 0 comments | Continued
Public Works Done Right
John Maynard Keynes once argued that, in a depression, it would be worthwhile to pay workers to dig holes, and to pay other workers to fill them up. But, as Nathan Lewis points out, below, when short-term “stimulus” becomes the focus, the effect is more likely to be short-term welfare. Read on…
February 19th, 2009 | Nathan Lewis | 7 comments | Continued
Benefit From Being A Baby Boomer
People sometimes ask me: “What should I do with my retirement account?” I often tell them to consider ways of retiring that are not dependent on financial abstractions and various corporate/government promises, such as Social Security or corporate pensions.
January 8th, 2009 | Nathan Lewis | 1 comment | Continued
A New Bretton Woods Vs. The Old Bretton Woods
In 1944, the world leaders that gathered in New Hampshire decided on a system based on gold. This was no innovation, as monetary systems for the past few centuries had also been based on gold. In the Bretton Woods system, the dollar was pegged to gold at $35/oz., and other currencies were pegged to the dollar. Currencies didn’t float in those days. Floating, manipulated currencies were considered an abomination. Exchange rates remained fixed…
November 21st, 2008 | Nathan Lewis | 9 comments | Continued
“The Battle for Investment Survival” is a Classic that is Still in Print Today
In 1935, a stockbroker named Gerald Loeb wrote a book called The Battle for Investment Survival. The dramatic title might be ascribed to the dramatic period in which it was first published. Disaster-mongering books were popular in the late 1970s as well. However, in the book (which was revised in the 1950s and 1960s), Loeb makes clear that the “battle” he had in mind was with inflation…
September 4th, 2008 | Nathan Lewis | 1 comment | Continued
Debunking Inflation Myths
Gradually, people are becoming aware that we have an inflation problem, which seems to stretch around the world. Perhaps it is time to think about how to resolve it. Certainly a few coy remarks by some Federal Reserve representative aren’t going to be effective.
July 3rd, 2008 | Nathan Lewis | 5 comments | Continued
A Gold Standard, Without Gold
If you understand supply and demand, you can peg a currency to gold even if there are no gold reserves at all. My own idiosyncratic system is the gold standard that involves no gold at all. There are no gold coins, and no government gold reserves. Gold bullion is freely traded on the open market, just as it is today. In my system, the currency manager (governments today) would adjust the supply of currency on a daily basis to maintain its value at the gold peg.
May 7th, 2008 | Nathan Lewis | 8 comments | Continued
Exchange Rates Aren’t a Problem When Currency is Pegged to Gold
In the 1970s the world’s currencies were pegged at fixed exchange rates to the dollar, while the dollar was pegged to gold. After the dollar left gold in 1971, and its value declined, other countries’ governments said: “Hey, wait a sec. I’m not sure of what you’re trying to do with this cheap-dollar stuff, but we don’t want any part of it.” So, in the spring of 1973, they all depegged from the dollar. See ya later, greenback!
February 20th, 2008 | Nathan Lewis | 1 comment | Continued
OPEC Should Return to a Hard Currency Standard and Drop the U.S. Dollar
OPEC had a problem. They were selling their oil and getting dollars in return. However, the dollar was losing value quickly. They worried that, in the future, the dollar might not be worth very much at all. They would have sold their irreplaceable natural resources for a paper promise from a country that didn’t keep [...]
January 10th, 2008 | Nathan Lewis | 6 comments | Continued
A History of the Gold Standard
It appears that we are slowly drifting into a period of monetary turmoil. Turmoil leads to change, and ideally the result of a widespread desire for change will be the establishment of a new gold standard. Indeed, there are some indications that this may be achieved by the end of this year, although it may [...]
April 6th, 2007 | Nathan Lewis | 6 comments | Continued
“Investing” in Backpacks for 2007
Of all the “investments” one might make at this time, one of the best may be to be prepared for a breakdown of the economy as we know it. This is not necessarily a prediction – any more than having fire or flood insurance is a prediction that you will have a fire or flood. [...]
January 12th, 2007 | Nathan Lewis | 2 comments | Continued
