I confess: I am unable to fathom why Matthew O’Brien holds a serious position writing about economics in The Atlantic. On one hand, he is an acolyte of mainstream Keynesianism to a tee. His playbook is as predictable as the sunrise: more monetary stimulus, more government fiscal deficits, higher prices, and the occasional swipe at gold. On the other hand, O’Brien’s ability to make a cogent argument for state-centric, mainstream views is severely handicapped. At one juncture, hissolution for persistently high unemployment was the printing of swimming pools of money. Why? Because “the world needs more money.” Hallelujah! What thousands of other economists condensed into milquetoast white papers and newspaper columns, O’Brien succeed with a first-grade level sentence.
His latest attempts to dress down the gold-adoring, limited government types are once again full of the kind of logic you would expect from a mental straightjacket PCer. In “Gold Was a Horrible Investment from 1500 to 1965,” O’Brien thinks he found the silver bullet for the precious metal bull market. While all the fiat-haters have found vindication in gold’sdecade-long run up in price, the pummeling their safe haven took over the past five centuries proves its inherent worthlessness. Or something.
Comparing an asset now to at least six lifetimes ago should strike the reader as silly. Nobody lives that long. But let’s entertain O’Brien’s criticism for now. Gold – when it’s used as money – is not an investment but acts a medium of exchange. For the time periods highlighted (1500-1965), gold and other commodities were used as money. Even under the Bretton Woods system, currencies were theoretically tied to the yellow stuff and still redeemable, if only by central banks. In a definitional sense, O’Brien is stretching the bounds of validity by saying the Midas metal was a poor investment choice.
Thanks to BrotherJohnF