Here's an excerpt from his latest column.
" Back in 1936 the economist John Maynard Keynes argued that increased government spending was needed to restore full employment. But then, as now, there was strong political resistance to any such proposal. So Keynes whimsically suggested an alternative: have 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. It would be better, he agreed, to have the government build roads, ports and other useful things â but even perfectly useless spending would give the economy a much-needed boost.
Clever stuff â but Keynes wasnât finished. He went on to point out that the real-life activity of 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. And no sooner was gold dug up than much of it was buried again, in places like the gold vault of the Federal Reserve Bank of New York, where hundreds of thousands of gold bars sit, doing nothing in particular.
Keynes would, I think, have been sardonically amused to learn how little has changed in the past three generations. Public spending to fight unemployment is still anathema; miners are still spoiling the landscape to add to idle hoards of gold. (Keynes dubbed the gold standard a âbarbarous relic.â) Bitcoin just adds to the joke. Gold, after all, has at least some real uses, e.g., to fill cavities; but now weâre burning up resources to create âvirtual goldâ that consists of nothing but strings of digits.
I suspect, however, that Adam Smith would have been dismayed.
Smith is often treated as a conservative patron saint, and he did indeed make the original case for free markets. Itâs less often mentioned, however, that he also argued strongly for bank regulation â and that he offered a classic paean to the virtues of paper currency. Money, he understood, was a way to facilitate commerce, not a source of national prosperity â and paper money, he argued, allowed commerce to proceed without tying up much of a nationâs wealth in a âdead stockâ of silver and gold."
