Keynes admits that a paper money system will only serve to hollow out the middle class and eventually destroy an economy. He also seems to suggest that a gold standard can never succeed as a monetary system.
He is right.
And it is because of government interference. Policy of uninhibited money and credit creation funneled into limitless spending initiatives simply serves to undermine the wealth of the private sector. But it is done under the guise of softening business cycle downturns, thereby precipitating a cloud of complacency over the private citizens.
The hard part is finding the incentive to save when interest rates are kept so low. That’s why so many are more than happy to park their money in gold until the environment changes. The only thing to worry about between now and then is if new gold investors are merely jumping in to try and make a quick buck. That’s how bubbles are blown …
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