QUESTION: 2014 should not have happened, but it did. There's no way to sugarcoat it: the gold bugs were wrong, Austrian economics was wrong, and the Keynesians were right. And now the sound money community is left trying to figure out what it missed and, crucially, whether the problem was merely one of timing or of fundamental worldview.
What do I have to believe? Keynesians are right? Shall I become communiste or socialiste? Shall I forget about Austrians economics? They have been wrong for the past 4 years and Keynesians are winning now… -TL
ANSWER: The Keynesians are not correct nor are the Austrians. Both of these theories are in serious need of revision. They are deeply rooted in a ancient world of tangible money that is defined by the territorial limits of a nation. I have sought to explain that the currency of the nation or empire that forms the financial center of the world economy has historically ALWAYS, and without exception, become the world currency extending beyond its borders.
Here is an IMITATION of a Roman gold Aureus of Septimus Severus (193-211AD). The imitation pictured here was struck in India and this demonstrates two things. First clearly GOLD was by no means the actual medium of exchange for here the imitation weighs 11.3 grams compared to the actual Roman coin 7.1 grams. The fact that the imitation weighs more illustrates that the CONFIDENCE in Roman coinage extended far beyond its borders. If it were gold that was the medium of exchange, then (1) there would be no need for India to imitate Roman coinage to gain acceptance, and (2) the raw gold should have been worth more than the Roman coin. This illustrates my point that the DOLLAR has become the world currency by default in the same precise manner because of the implosion within Europe, the decline in Japan, and the lack of any sophisticated market in China to allow foreign investment into its currency.
We see this very same trend nearly 600 years earlier when Athens was the financial capital of the world. Athens Owls were imitated in Northern Europe as well as in Asia.
