LTE: Gold Standard

Regarding "The sad joke about bits and barbarism" (Thursday Editorials), liberal economist Paul Krugman once again derides all who fail to appreciate the Keynesian principle that paper money is as good as - and arguably better than - a medium like gold.  His faith in this notion is at the core of his often-repeated claim that governments can spend us into prosperity simply by printing and spending more money.

 

In Krugman's world, there is no scenario where gold is better than greenbacks, but for more than 5000 years, people of all nations have valued gold, not just for its beauty and scarcity, but because it will be valued a year from now, and 1000 years from now.  Ask any American if they would prefer to hold $1,000 in gold or $1,000 in, say, Zlotys, the national currency of Poland, and they will invariably pick gold.  Ask a Pole if they would prefer to own gold as opposed to Pesos, and they will pick the gold every time.  This is true because everybody - except Krugman - understands that gold has intrinsic value, while paper money is only as good as the promises of the issuing country.

 

I don't expect Krugman will ever get why people and governments value gold, but they all do, which taints not just his unreasonable faith in greenbacks, but most of his arguments as to what actually drives an economy.

 

Pete Smith
Cypress, TX

http://www.chron.com/default/article/Monday-letters-Solid-gold-Brian-Cushing-5097092.php