The Think Tank of World Economists could be Classified Into Two Distinctive Groups – The Keynesians Or The Austrians’ Schools Of Thought. The Austrian Economists have been around for a long time, while the Keynesians are fairly new to the World.
The Keynesian Theory originated from USA During The Great Depression Years Of 1929 – 1939. John Maynard Keynes propounded the Idea that During Times Of Recession Or Depression, when People or Businesses Are unable to avert Economic Downturn, the Government Should Intervene By Increasing Government Spending To Create Public Works That Provide Jobs For The Masses.
He even suggested that Government Provide Jobs For People By Putting dollar bills into bottles and bury them under the soil. Then pay people to dig up the buried dollars again! Even if the whole exercise is not economically sound or productive. At least the people are given jobs to do, and get paid for it. That means that the Government is Given The Free Reign In Deficit Spending To Boost The Economy! However, John M. Keynes did not live to see The Ultimate Result Of His Suggested Experiment.
His Loyal Disciples & Followers Are Paul Krugman & Ben Bernanke. In Fact Ben Benanke Is Also An Avid Student Of The Great Depression. Knowing The Horrors of The Depression Years That Devastated Millions, Ben Bernanke vowed to fight it with All His Fire Power!. He even hinted the idea of throwing money to the masses from a helicopter – earning the nickname of Helicopter Ben.
So far so good – he had fired TWO QE (Quantitative Easing) Into The US – and through the USA the Entire World System. Let me illustrate. “If you inject poison into your hand, the poison doesn’t stay there. The poison will go into your Blood Stream and spread to your heart and the heart will circulate the poison to all parts of your body. This is what happen when Benanke followed the Doctrine Of John Keynes To The Extreme.
Doctrine is A Belief System. We act according to what we truly believe – not what we pretend to believe. What we actually believe leads to action. And action produces results – either good or bad outcome.
Men like Marc Faber & Jim Rogers are from The Austrian School Of Thoughts. With The Damage done to Paper Currencies, they are feverishly converting paper money into Solid Gold. By the Way, some years back, if you remember, there was a rush to Euro from US Dollars; then from Euro back to US$; and back and forth, and back and forth, again and again.
Till someone says, “Both US$ & Euro are Doomed Because A Financial Tsunami Is Coming – No Point Running From SHORE TO SHORE – TIME TO HEAD FOR THE MOUNTAINS. SO GOLD WENT UP FROM US$850 an ounce to Almost US$2,000 an ounce! Gold Overshot On The Upside In Panic Buying & Fear & Greed Also Came Into Play.
Gold has fallen back to near US$1,300 an ounce. Both Marc Faber & Jim Rogers are still Holding On To Their Gold Tightly. They plan to add more if gold prices weaken further. They believe they might be wrong short term, but long term they will be proven right. You see, they are from the Austrian School Of Thought.
Should we buy gold, then? To Marc Faber, gold is not just an investment. It is like buying an insurance for protection. In this case, to protect value from Benanke’s Dollar Printing Machine. The Continual Addition of Fiat Money Into The World Currency Circulation Will Continue To Depreciate Paper Money.
That’s Why You Have To Protect Your Interest. By Doing Nothing, you are like the naive frog that will get cooked one day by Sky High Inflation of Everything!