Q: Would Hillary Clinton’s election to the presidency of the USA be positive for the price of gold?
A: On balance, yes but not for the same reasons as Trump’s election. I expect that the economy would tank faster under a left wing Marxist approach that could be expected from Clinton. Trump is more nationalist and so I would expect that public confidence would hold up better. But, we are talking about shades of gray. The economy will crash and burn in either case. There is no way to avoid that.
Q: Why do you say that?
A: The crash is just the realization that the wealth is gone. The theft and squandering happened at the time of the monetary expansion. The panic is not the cause of wealth destruction. It is only the realization. Absent a time machine return to the period of the theft and its correction, the crash and burn is as inevitable as night following day. There really is no free lunch. It is always the case that someone pays.
Q: Ok, I got it. Is there an economic law here that is in play?
A: It has more to do with what is true and false then economic theory.
Q: I do not follow. Please explain.
A: Let’s take a closer look at what does and does not happen when the government increases the money supply. Are more goods and services created? Can there be an increase in economic wellbeing without an increase in the production of goods and services that the market economy demands?
Q: Obviously no but there is a stimulus possible, is there not?
A: Yes, the people who get the new money are then able to spend it. But this is only because some of the purchasing power of the prior existing monetary units is transferred from the existing owners and given to the new money holders.
Q: Cannot that be simulative? Does it not increase the GDP?
A: Yes and yes. But the GDP is simply a measure of economic activity for a given period of time. You can build a hundred bridges to nowhere and that will increase the GDP. It does not increase economic wellbeing. It is the squandering of wealth. Perhaps there would be a better result for society if the purchasing power of monetary units stayed with the people who earned the money by providing goods and services valued by the market rather than government bureaucrats, politicians and their controllers?
Q: I cannot think of any government economic stimulus program that meets those criteria. If people are smart enough, energetic enough and honest enough to earn money by providing goods and services to a market economy then they will most likely do a better job of investing that wealth than any part of the political sector.
A: Neither can I. Ludwig von Mises expressed it best: just because you can keep warm for a time by burning your neighbors furniture in your furnace does not mean that you have discovered a new economic law to promote permanent societies economic wellbeing. Clinton knows this but will never admit it. She may be marginally better than Trump in the short term for the pride of gold but she is also more likely than Trump to make it more difficult for you to own and use gold in the long term. And, always remember that Carthage must be destroyed.
by Arthur Fixed
[box type=”info” style=”rounded” border=”full”]Commentary from Arthur Fixed the author of the Art of Speculation during Civil War – Sun Tzu Meets Jesse Livermore is a private manuscript copyrighted 2012 by Art Fixed.[/box]
Leave a Reply