The Future of Gold
The US dollar's strength as the equity and commodity markets collapsed was due to deleveraging, writes Naufal Sanaullah. That is over. Oil seems to be putting in a bottom on strong volume, no one is left to buy any more negative real-yield securities the Treasury is issuing, and gold has started looking very bullish. FULL ARTICLE
Comments (45)
Keith
So where does one go to purchase gold?
Published: January 26, 2009 8:39 AM
geoih
It's a good thing you don't live in South Korea.
Published: January 26, 2009 10:27 AM
J Cortez
geoih said: It's a good thing you don't live in South Korea.
This is true.
Not to be alarmist, but I think it's possible we could see similar things happen here.
Naufal Sanaullah: The Fed, in an effort to minimize inflationary perception, has for the last two decades supported naked COMEX gold shorts to keep gold prices artificially low.
I understood that central banks try to manipulate the price of gold but I didn't realize they were involved in naked shorts. Does anybody have a link with more information regarding this central bank tactic?
Published: January 26, 2009 10:46 AM
Andras
@J.Cortez
Try gata.org on gold manipulation by CB-s (JP Morgan).
Published: January 26, 2009 11:23 AM
Inquisitor
Great article, thanks. Time to stock up on some gold!
Published: January 26, 2009 11:45 AM
Enjoy Every Sandwich
This is slightly off-topic, but can someone point me to a good book/article/whatever that discusses the nuts and bolts of gold ownership? In particular, what exactly I would do with gold in a crisis.
For instance, let's say the hyperinflation has set in, and you need the proverbial wheelbarrow full of dollars to buy the proverbial loaf of bread. But hey, I've got gold. So what now? Trading the gold for paper seems like a loser--the paper dollars are worthless trash, no matter how many of them my gold gets. Will people (most of whom have probably never even heard of the gold standard) accept my gold as payment? What if private ownership of gold is once again made illegal?
Nobody should answer here on this thread--but I would be grateful for reference to a reliable book etc where I can look it all up for myself.
Published: January 26, 2009 12:15 PM
I Hate Taxes
When things go bad, people accept gold as money and reject paper money.
Ever heard of the expression: "not worth a continental" ?
You should buy gold coins and silver coins in case the end of the world comes.
"What if private ownership of gold is once again made illegal?"
No problem, keep your gold and silver coins deeply burried under ground and people will still accept them as payment, especially since they are illegal they will be worth more.
Published: January 26, 2009 12:40 PM
I Hate Taxes
Sandwich,
I would most certainly accept gold as payment. And most certainly refuse paper money in the event of hyperinflation.
Published: January 26, 2009 12:42 PM
greg
Sounds like you could be on the infomercial for 1 800 MINT GOLD. You made some good points including the fact that gold really does not have any uses except for holding. And it is this fact that will keep it from rising to the levels you stated. But that is my opinion.
As I stated in the past, my target for GLD was $90 and it hit it today. So I am a seller today and moving into AA based on aluminum prices are so depressed and will kick in when inflation takes off. I believe we will see larger gains in other metals that have other uses than just holding it.
Published: January 26, 2009 1:12 PM
greg
I made a mistake, the number you need to call for gold is 1 866 MINT GOLD.
Enjoy Every Sandwich,
Don't buy a book, just take and buy a $5 gold piece, record your cost including broker fees, and go out into the world and try to buy something with it. Then when you find you can't use it in the grocery store, the gas station, Starbucks and Home Depot, go back to your coin broker and see what he will give you for it after he takes his fees. Once you are done, you will have all the nuts and bolts.
Published: January 26, 2009 3:03 PM
andy
if you need to know where...
goldismoney.info
Published: January 26, 2009 3:08 PM
pbergn
Good article, but I am afraid I have to disagree with the author's main premise of imminent high inflation resulting in dramatic rise in prices of gold or any other commodities used as wealth accumulation mechanisms...
Here is why:
The author's logic would have been correct had the economy stayed fundamentally sound, by not shedding so many real jobs. I understand the author's argument, that ultimately, the US Government will have to inflate its way out in the face of growing unsustainable debt, much like when a Ponzi scheme reaches its climax.
But the author does not take into the account the significant contraction of the real economy, that is that there are fewer and fewer viable private players in the market caused by the massive defaults, mergers, buy-outs and outsourcing...
Frankly, I do not see how that excess liquidity will actually make its way to the Main Street, to the ordinary consumers that is, when it is increasingly more and more difficult to qualify for credit, and when the US consumers practically do not have any non-borrowed assets left to invest anywhere (say, to gain the much inflated returns). Now, where this new income sources will come from?! Unless Mr. Bernanke starts throwing cash from the helicopters indiscriminately to everyone, regardless of their employment status or credit-worthiness. This scenario seems very unlikely to me...
What is more likely, is the continuing contraction of the real economy accelerated through snow-balling mortgage and credit-card defaults, leading the economy to implode due to lack of liquidity in the financial system...
So, to summarize my thought, I see depression looming on the horizon, perhaps with all that excess liquidity stagnating in Stock Market, central and other private banks, and other cesspools of paper assets...
You see, when people are hungry, and do not have any real non-borrowed assets left, and when all the income sources have dried out, the only game that remains in town is the cash... Since they will start selling off all the gold, jewelry and other hard assets that they may have left in order to survive, creating the downward pressure on precious metal and gem prices...
I predict the cash is going to be the king next few years, unless new income sources will start appearing en mass in the near future (which is not likely form where I stand)...
Still, I rate this article as excellent, due to its well laid out arguing points, research done, and clear writing style...
Published: January 26, 2009 3:30 PM
Jason
I find it difficult to believe that Bernanke will be okay with the price of gold soaring. This in itself will frighten the public. He may not be able to stop it, but I disagree with premise that he'll be content to ignore it.
Published: January 26, 2009 4:45 PM
Jason
geoih said: It's a good thing you don't live in South Korea.
What is going on in Korea??
Published: January 26, 2009 4:48 PM
J Cortez
Jason: What is going on in Korea??
Some guy got arrested for allegedly posting on a weblog statements critical of their government and had made several correct predictions about the downturn of their markets. Officially, an internet "slander" law was the reason riot police raided his apartment.
Read about it here: http://www.economist.com/research/articlesBySubject/displayStory.cfm?story_id=12947490&subjectID=348963&fsrc=nwl
Josph Potts had posted it on the Mises blog originally, he also posted a similar story about Latvia here: http://blog.mises.org/archives/009037.asp
Published: January 26, 2009 5:38 PM
Gil
Actually E. E. Sandwich if it's all doom&gloom then you're better off stockpiling durable food and water (and a can opener!) than just precious metal coins lest you find yourself giving a 1 ounce gold coin to I. H. Taxes for just one meal.
Published: January 26, 2009 5:45 PM
Paul
pbergn, great post. You seem to be the only other guy making logical sense. In theory it may sound easy just to create inflation - just print a bunch of notes and viola! However to create and sustain inflation would also require that the newly created money is SPENT. That's certainly not what's been taking place and doesn't look to happen for quite some time. The psychological mindset has totally reversed. Instead of folks going on a debt binge like they had in the past, they are doing the exact opposite. They are conserving and paying down debt. Another reason imminent hyperinflation is unlikely, is the fact that so many trillions in treasury bonds and bills are owned by foreign governments and large institutions. Do you truly think those big players, such as China and Japan, are simply going to stand by and do nothing?
About gold - it looks toppy to me. The Sentiment Index currently shows 86% gold bulls, which is only a little off from the record high recorded during last July's $1000 gold.
Published: January 26, 2009 6:41 PM
Joe
I'm worried of devaluation myself. Seems to be upon us this year. With China reducing it's purchases of our Treasuries and Japan a net seller last year there won't be much left to do but monetize.
So, if MONEY VELOCITY (money spent) doesn't pick up a devaluation will be imminent. As the Fed would rather inflation over deflation for many reasons (artificially high assets).
A great beginners book for family or friends you would like to enlighten to the subject: Guide to investing In Gold and Silver , author Michael Maloney
Also, I'd like to add a great way to invest in gold and silver is through GoldMoney.com. I don't worry about confiscation, it's a safe storage is Switzerland and easily sold or purchased at your request.
Published: January 26, 2009 7:24 PM
Forsmant
I disagree with the articles assumptions as well. A lot of debt still has to deleverage and many more jobs will be lost. America has been living large since the 1970's and the rest of the world is not happy with us right now. We are the richest country in the world and we buy all this stuff with IOU's. America is hoarding the worlds wealth without producing much of value that anyone wants. Our economy is service based and many of those jobs will be lost and we will have to start building factories.
Stocks are still historically overvalued and after a bear market rally they will reach lower lows than now. Gold looks like it is in a bear market rally not a bull market. Too many people bullish on Gold usually means the opposite is about to happen. I expect gold and silver to lose against the dollar. More deflation will make it harder for people like me to continue to pay on overvalued homes putting more downward pressure on prices.
Much of the new money might have to go to China and Japan and the various other countries we owe money. Why are we calling out china for currency manipulation? China wants its money and they don't want inflated dollars. I think war is coming and coming soon.
America can print gold no more, we must actually give something of value to the world.
Published: January 26, 2009 7:28 PM
Nick gray
Why not use 'Gold' as your colour of identity? People know who the Reds and the Greens are, so being called Golds shouldn't be too much of a stretch. It's a pretty colour, and it says what we stand for- a Gold standard, and living by the Golden rule (treating others as you'd like to be treated, etc.).
Published: January 26, 2009 7:54 PM
N. Joseph Potts
I have a reputation (with myself and others) as pessimistic/paranoid, but I anticipate (US and other) government confiscation of gold. They'll go after people who left record trails of having taken delivery of bullion and coins, and get that stuff (perhaps along with silver) out of circulation.
The same government has done the same thing in the past. History (recent, at that) can be a useful guide.
Published: January 26, 2009 8:59 PM
Kevin B
To those who believe that newly-created money won't be spent:
Can't the government spend it? Create trillions of dollars and spend spend spend. Create phony jobs, prop up inefficient businesses, and see what happens.
Then, if the dollar plummets, blame the Chinese and take advantage of another excuse for additional military spending.
Published: January 26, 2009 8:59 PM
Yancey Ward
Like Joseph Potts, I don't think there is a chance in hell those who have the foresight to protect their assets from inflation by buying gold will be allowed to "profit" from this foresight. You heard the man, you gotta have skin in the game, and if you refuse to play, you will be forced to ante in sooner or later.
Published: January 26, 2009 9:12 PM
Bruce Koerber
Bernanke is an 'intellectual' ego-driven interpreter who is narcissistic and an ego-driven interventionist. These are the qualities that the unConstitutional coup was looking for in a Fed Chairman. His lack of ethics was the final character flaw that they sought, meeting the criteria and making him their perfect agent.
He is convinced that he knows about the Great Depression and thinks he has made contributions to the economic literature. This fantasy keeps Bernanke in love with himself.
He will apply his fallacious 'economics' to try to redirect wealth without any ethical conscience. And finally he will act proud of his appointed position as the front man for the inner circle of the unConstitutional coup.
Published: January 26, 2009 10:15 PM
Ryan
Yeap, it just might be time to short gold.
Published: January 27, 2009 12:24 AM
Ned Netterville
Back in the late 70s or early 1980, gold reached an historic high of about $2850 to $3000, measured in current dollars. No reason it wont go as high or higher during the next period of monetary inflation.
Also, recall that during the 70's the Treasury conducted regular (twice each month, I think) auctions of gold with the stated purposes of "bringing an end to any remaining monetary role gold might play." The ploy was a complete failure as the price of gold increased relentlessly throughout the period of the sales of millions of ounces, and ended abruptly well ahead of schedule when Treasury's stupidity became more and more apparent to a bemused financial world. The largest buyers of Treasury's gold were foreign banks. Less than a handful of individual American's submitted successful bids. (I think the minimum bid was for 100 ounces, so not too many individuals could afford to bid.)
If anyone knows otherwise I hope they will correct me, but as far as I can determine there hasn't been a physical audit of Treasury's gold stocks, nor of the NY Federal Reserve Bank's gold reserves, in many decades--if ever. If this is true, and if any of the gold is missing, calculating the ratio of government gold to any measure of the money supply cannot not be done with any certainty.
Published: January 27, 2009 12:51 AM
Stefan Guta
I dont understand the gold shorts here - this is an austrian site, for crying out loud! THE Austrian Site!
Mises called gold the best money around. All countries today have fiat currencies, and all currencies are now on the verge of collapse. Fiat currencies are destined to die at one point, and for most, that time has arrived.
That will leave only gold with real value.
The next period will be the greatest whelth transfer in history, from those who dont have gold (and silver for that matter) to those who have it.
Published: January 27, 2009 12:57 AM
pbergn
TO: Kevin B
Kevin, could you please explain to me what is a "phony government job"? I don't think that by creating "phony jobs" such as public infrastructure re-building or creation the government can actually create inflation. What this will do is create a myriad of private-sector jobs to "support" the activities (as what is usually happens in these type of situations)...
Now I agree that the government in the job creation business is a highly inefficient way of capital allocation, but this is another story...
I do not think this will create inflation. It will simply create useless or inefficient economic activity with trickle-down effect to the private sector. In order for the government to create inflation it has to really over-pay its workers by a magnitude, and ask very little in return, which again is a stretch to ask even from such an inefficient employer like the government...
What is more likely, in my opinion, as a inflation creation scenario, is foreign holders of US debt rapidly monetizing it coupled by heavy buying of real US assets, such as land, solvent and insolvent US enterprises, stakes in public infrastructure, etc... This kind of foreign spending spree may actually result in inflation in the US, but it won't be on an hyperinflation scale, since this will simply re-inflate the deflated US economy (bubbles) in the process taking some wind out of the inflation sails...
Published: January 27, 2009 1:05 AM
pbergn
TO: Stefan Guta
Stefan, unfortunately Gold also cannot be treated as the "absolute" currency, albeit one of the best ones...
Gold can be shorted when the majority of the market players are bullish on it in expectation of the imminent inflatory environment, with the shorters betting on the ensuing deflation, instead...
This can may well happen this time around as well, since the real economy does not show any signs of picking up, and the US population's non-borrowed assets are in the negative territory for quite some time now...
Published: January 27, 2009 1:26 AM
pbergn
TO: Stefan Guta
Stefan, unfortunately Gold also cannot be treated as the "absolute" currency, albeit one of the best ones...
Gold can be shorted when the majority of the market players are bullish on it in expectation of the imminent inflatory environment, with the shorters betting on the ensuing deflation, instead...
This can may well happen this time around as well, since the real economy does not show any signs of picking up, and the US population's non-borrowed assets are in the negative territory for quite some time now...
Published: January 27, 2009 1:27 AM
Ned Netterville
pbergin asked: "[C]ould you please explain to me what is a 'phony government job'? I don't think that by creating "phony jobs" such as public infrastructure re-building or creation the government can actually create inflation. What this will do is create a myriad of private-sector jobs to "support" the activities (as what is usually happens in these type of situations)."
I know this wasn't asked of me, and I'm sure Kevin is capable of answering, but I hope you both wont mind me taking a stab at it on behalf of Kevin's position,
There are two sectors of the economy; the private sector and the public sector (government). The former produces (creates), the later consumes (spends). People in the private sector work and invest to earn a living or a profit. The public sector forcibly taxes people in the private sector for whatever purposes it can devise and justify or rationalize by means of (pseudo) economic contrivances and meaningless nostrums such as, economic stimulus, monetary policy, fiscal policy, pump priming, multiplier effect, government investment, community investment, common welfare, etc., etc., etc.
All government jobs are phony in the sense that they cannot do or produce anything without an offsetting but even greater loss of jobs or production in the productive private sector, either now or in the future. Government "infrastructure" work is less than worthless, it is wasteful because the full cost of its so-called "investments" must be now or later deducted from private sector resources and creative capital, which sector, if its resources had not been taxed away from it to pay for the government make-work infrastructure boondoggling, would have produced and created capital wealth many fold greater than the value of the government's infrastructure spending, and that wealth would spread throughout the economy, some of which would go back to the public sector in the form of taxes. You have failed to consider the more-than-offsetting "opportunity cost" of public infrastructure spending. (A better name would be "lost opportunities costs.) If the public sector was capable of investing profitably or creating anything it would not need to rely on forcibly extracting taxes from the private sector to pay for its "economic developments." Keep your eye on the ball, pbergen, by simply watching which sector pays taxes because it produces, and which sector forcibly collects taxes because it is incapable of producing or creating anything. Government only spends, it never invests. Investing is predicated upon the profit motive. No legitimate or illegitimate government anywhere ever pursued profit or operated profitably. The state obtains its resources by plundering other nations or taxing its own people, which is essentially the same thing. Both methods depend on the use of force and violence, and are consequently immoral--in my opinion.
As for whether government jobs cause or "create" inflation, define inflation. It is a word that has several definitions and a reasonable discussion of it requires both parties be discussing the same thing.
Published: January 27, 2009 10:30 AM
pbergn
TO: Ned Netterville
Thanks Ned for your input, I appreciate it.
Look, I agree with your main premise that generally government jobs are not the best way of allocating the capital and resources...
But this is not always true: Are you saying that building public roads, bridges, electric grids, gas pipes, public schools, fiber-optic lines, fire-statitions, satellites, defense equipment and infrastructure, etc., etc. is a "phony economic activity" ?!
I beg to disagree with you here. Of course some of it could have been done more efficiently by private contractors, and in most cases, this is what exectly being done - the government hires private sector companies that have submitted the best bid to carry out the projects paid by tax-payer money...
For example, take all the Telecom companies... They all basically are feeding on the same infrastructure subsidized by the government...
I understand, that if given a chance some Telecom companies would have started the development of infrastructure on their own... But then, this would not have been in a large scale or uniform manner in terms of equipment and communication standards...
Let's take my neighborhood's example: The place where I live is North-Eastern suburbs of Seattle, WA, had a lot of new housing construction going... All the house builders were private enterprises... But none of them would be willing to pay for the sewage, public telephone grid, common area illumination, paving of the in-roads, and installing traffic signs on them... If they did that it would have cost them too much to build a house, and they would not be able to stay competitive..
What I am trying to show you is that many private enterprises feed off of public infrastructure to make their businesses work... Now imagine the opposite... A corporation moved in in my neighborhood and bought all the public infrastructure and land... They would start charging fees to the home builders and phone companies for every bolt screwed on their tab... See where I am going with this? It would be too expensive for all other private businesses to do business since corporation now owns the place and wants to squeeze every dollar it had invested out of it... Whereas if let public infrastructure to remain public, no one has commercial interest in owning it, since it is public and is paid by tax-payer money, which will allow the private sector to use it for profit in some shape or form. In short, there is no monopolization of critical resources by a for-profit enterprise that would allow it to gain significant competitive advantage against all other private sector players...
Hope this example demonstrates my point...
Published: January 27, 2009 1:49 PM
Kevin B
To: Ned Netterville
I appreciate your comment, and your point was well put.
Published: January 27, 2009 4:59 PM
Kevin B
To: pbergn:
OK, I'll steal this one from Ned. ;)
The issue with government "jobs" is, as Ned mentioned, opportunity cost. Since government projects must rely on forcible payment for services, they are necessarily less efficient, with the benefit always outweighed by the cost.
And infrastructure isn't a special case. If a private business can't make a profit, whether providing power, communications, transit, or shoes, then that service should NOT be offered. If the service would be unprofitable, then the resources should be allocated elsewhere, according to the customers' desires.
If you think that services normally provided by tax funds, such as roads, cannot be privately provided, then I offer North Oaks, MN as an example:
http://www.cityofnorth-oaks.com/
There is no reason to assume that a customer must be forced to choose his greatest desire.
Published: January 27, 2009 5:00 PM
Deefburger
pbergn: Your points are well taken. However, there is no guarantee that the solutions provided by "public money" would be better, or even cheaper than a free-market private venture to accomplish the same thing. The problem is that there are situations where a single entity is needed to supply a service or infrastructure to multiple people, in the same geographic area and such a situation is often dealt with using pulic money and institutions.
It is also not uncommon for the service to be denied when the geographic limits of the tax base are reached. In my neck of the woods, this is encountered as pot-holes on an otherwise newly paved road, because the road reached the end of the incorporated area, even though the road itself continues on accross the county.
I think that for these situations, perhaps a non-profit private enterprise may be a compromise solution that could keep fees low, and quality high. Kaiser Permanente Medical is a really good example of a non-profit corporation with it's eye on quality of service and low costs. They get a bad rap sometimes, but the accounting and executive functions are separated from the medical decision makers (doctors), in this organization, and since they don't have to answer to anyone except those they are serving, (no shareholders), they tend to deliver a very high level of service for the money.
If infrastructure, indeed, all roads, sewer, water etc were dealt with in a similar fashion, public owned say, by the people whom they serve, in a non-profit manner similar to Kaisers, the "public" money might be spent better.
I agree that the privatization of public needs like water and sewer and roads has numerous monopolistic problems associated with it, but government is notoriously inefficient and subject to influence by unscrupulous lobbies and special interests.
This is a difficult problem!
Published: January 27, 2009 7:09 PM
Vanmind
"I dont understand the gold shorts here"
Do you understand the concept of a planted stooge?
Published: January 27, 2009 11:09 PM
p2pvoice
The author mentions this in his article but doesn't provide any source information:
"I've heard estimates of 7500 and 8000 in the Dow Jones Industrial Average as being minimum support levels that would cause insurers and banks to realize massive losses, causing widespread insolvencies in them and other weak sectors like commercial real estate that would irreversibly collapse the economy."
I have also heard this from others but no source. Interestingly, over the last few weeks, every time DJIA dips below 8,000, "buyers" appear and push it back up.
I would appreciate if anyone can provide any source information/link for this "data".
Thanks.
Published: January 28, 2009 3:15 AM
eric lansing
"I have a reputation (with myself and others) as pessimistic/paranoid, but I anticipate (US and other) government confiscation of gold. They'll go after people who left record trails of having taken delivery of bullion and coins, and get that stuff (perhaps along with silver) out of circulation.
The same government has done the same thing in the past. History (recent, at that) can be a useful guide."
*********
This is nonsense. People surrendered their gold for "patriotic" reasons - see Garrett's The People's Pottage which is in PDF on this site and is as long as The Case Against The Fed.
as for gold bears, you have no idea what you are talking about.
http://www.grantspub.com/archives/free.cfm?nid=338
http://www.thelongwaveanalyst.ca/pdf/V5_1.pdf
I challenge anyone to come up with a reasonable response to those opinions. If nothing, look up the inverted pyramid on the second to last page of that 2nd link. Inflation or deflation, gold is the only winner. They don't call it a "gold standard" for nothing. Gold has been money for 5000 years and will become money again. The logistics of confiscation are unfathomable. The only realistic "confiscation" would be to make sales in gold illegal, and come that day, Americans and their 300 million guns will do something about it. Remember, Fox news has been pushing gold for years. You think southern Republicans are going to let BHO or BSB tell them to surrender their gold?
They'll get the c sparto.
"Where is your gold?"
"I don't know, I can't find it - I've been looking desperately, someone must have stolen it"
Dow 5000 gold 5000 is my bet.
Published: January 28, 2009 2:59 PM
C.A. Lawrence
It might be useful to look again at the purpose and ethos of the Mises Institute to determine whether the advice to buy gold is biased or unbiased.
Published: January 30, 2009 4:33 PM
Risk Addiction and the Big Bang
As for this article, I tend to think the author is right but only if Ron Paul is wrong. History does show that government manipulation has a limit and once reached, fiat systems always collapse. But history has yet to record the adventures of Ben Bernanke & Co.
I would love to know what Mr. Bernanke is buying, according to Ron Paul, he had a private meeting in Switzerland the day before he gave his speech in London. Ron Paul is of the opinion that they would like to attempt a global central bank.
Aside from creating jobs at the global level for people who failed at the national level, what will a central bank do to national economies? How do you keep everyone from jockeying for favorable exchange rates?
Maybe this is how they will go out - literally with a bang and a show down, shooting each other to pieces. Come to think of it, Barack is talking Big Bang, could the financial world be that addicted to risk and danger???
Published: January 31, 2009 2:43 PM
vladimir
massive currency devaluation is a possible scenario but i doubt it ... there are too many foreigners holding american debt that own nukes, who will be very pissed off
i think there will be genuine deflation in america and the rest of the world where the dollar will be king for the next few years
Published: February 2, 2009 11:47 PM
vladimir
massive currency devaluation is a possible scenario but i doubt it ... there are too many foreigners holding american debt that own nukes, who will be very pissed off ...
this crisis is different than in the 1930's for the following 2 reasons: many more foreigners are holding US debt than in the 30's and in the 30's nukes haven't been invented yet
i think there will be genuine deflation in america and the rest of the world where the dollar will be king for the next few years
Published: February 2, 2009 11:50 PM
Ned Netterville
Kevin, I certainly endorse your response to pbergen, to which I need add--nothing.
Deefburger: You said, "The problem is that there are situations where a single entity is needed to supply a service or infrastructure to multiple people, in the same geographic area and such a situation is often dealt with using public money and institutions."
The concept that a single provider (better known as a monopoly) can provide certain services better or cheaper than competition is, in my opinion, a statist-contrived bogeyman. It is the argument used to justify the government-licensed monopolies that are granted to our so-called "public utilities," whether publicly or privately owned. What is primarily gained by such public-utility monopolies are multitudes of executives who spend their time going to Kiwanis and Lions luncheons, and tradesmen and laborers who take long breaks and lean hard on their shovels for most of the day.
Deef, You also said, "I think that for these situations, perhaps a non-profit private enterprise may be a compromise solution that could keep fees low, and quality high."
Deef, the profit motive is what drives businessmen and entrepreneurs, and competition in a market that is open to one and all is what provides the very best products and services at the lowest possible cost. This applies as well to medicine and all forms of health care as it does to hamburgers. There is nothing special about medicine that distinguishes it from any other business. However, as an industry that has been so severely distorted and traumatized by government intervention, subsidization and regulation, it is no longer possible to deduce what it would look like under a regimen of freedom except to say with certainty that it would be a hell of a lot healthier and so would we. Of course the same could be said of the transportation industry, energy industry, and, more recently, the auto and financial industries. I do not mean to disparage the company, but private, "non-profit" corporations such as Kaiser are merely distortions of free enterprise, brought about as a result of the nation's ludicrous system of taxing business profits. Whatever advantages they may have because they are not operated for profit are certain to be more than off set by the fact that they are not operated for profit. The profit motive is responsible for far more benefits to humankind, including the very least among us, than any and all of the altruistic motives that inspire non profits.
Anyway, why would you want to compromise freedom, which obviously subtracts and detracts from our humanity.
Published: February 4, 2009 5:14 PM
Sachin
Global gold prices are about to shot through the roof as the metal is coming into action after a hiatus of two long decades prior to the turn of the century. Look at the physical demand side and the devaluation of all leading currencies in the world. The U.S. Mint recently announced it was temporarily suspending all sales of the 24-karat American Buffalo gold coins due to increasing demand as the Mint's inventories were depleted and the currency- gold ratio has been steadily falling in USA and other major developed economies, meaning more and more paper money is printed which is backed by fewer gold assets. Its probably the only commodity, apart from sugar and cocoa to have managed to provide some yields in 2008- a catastrophic for global asset markets
Published: February 9, 2009 8:02 AM
Larry
Your article is obviously full of DOUBLE TALK. TOTAL NONSENSE!!! And your predictions have obviously failed. What a joke!!!
Published: October 24, 2009 3:47 AM