The Barbarous Relic -- "I Just Buy It"

John Maynard Keynes, whose ideas have such an important place in modern macroeconomics, referred to gold as a "barbarous relic" in his 1924 work Monetary Reform and in a 1944 speech to the House of Lords. With the decline of the gold standard for currencies, one might think that gold is little more than a "barbarous relic", having little interest to any but jewelers, electronics fabricators, and commodity futures traders.

Yet with the decline of the gold standard for currencies, the modern world faces a situation in which central banks can create their fiat currencies at will. In the wake of the financial crisis, they have been doing a lot of that lately. If new dollars, euros, etc. are not consumed in acts of deleveraging, as they have been to some extent so far, currency holders (like you and I) may start to become concerned that their dollars, euros, etc. will become worth less relative to real things that are less easy to create. In other words, they may worry that the necessary inputs to their lives and their industries -- energy, food, metals -- will become more expensive in monetary terms.



Perhaps this is why gold the "barbarous relic" attracts interest today and often seems to trade on the basis of perceived risk rather than on the basic supply and demand, or interest rates that determine carring costs for future delivery. But given such a tenous perception as risk, would anyone want to hold gold as a significant portion of his portfolio for very long? When perceived risk is such a personal matter, what complicated strategy would one need for deciding when to buy and when to sell? For most of us, gold seems too risky itself to hold with confidence.

If we look at Commodity Online, we see that famed investor Jim Rogers said of gold "If it goes down I'll buy some more, and if it goes up I'll buy some more. I periodically buy some gold. I don't have a method to it. I just buy it."

If one thinks that recent price ranges for gold are far below future prices, then he does not need a complicated strategy for buying and selling: "If it goes down I'll buy some more, and if it goes up I'll buy some more."

So, there you have a strategy for accumulating and holding gold as a hedge for the loss of value of the currencies and other financial assets created by mere humans. The strategy is insensitive to fluctuations in price: "I periodically buy some gold. I don't have a method to it."

The deflationary forces of a deep recession give little indication of future inflation, especially as so many people are saving their dollars and buying US Treasury securities for safety now. Indeed, Treasury prices seem insensitive to the impending flood of issuance. That is the present, however. If you think that the world's reserve currency, the US dollar, will be worth much less in the future, you might want to consider other assets, such as gold, and a trading strategy. Gold -- "I just buy it".

Health Care in the US -- Inefficient and Discriminatory

No Public Option. President Obama has apparently taken the "public option" for US health care off the table -- in other words, whatever health care reform the Obama administration is able to engineer, it won't be a public program providing universal care with the Federal government as single payer.

Who Wins, Who Loses. The big health care business special corporate interests must be greatly relieved. With the help of their right-wing ideologues, they have finally paid off enough members of Congress to get their way. The American people are the real losers, because the system will not get the fundamental reform that it requires.

Why We Need Health Reform. If you need more evidence that the US health system is in need of fundamental reform, just consider the above chart from the World Health Organization, comparing the health of citizens of the US, UK, France, and Singapore. It shows how poorly the US health system performs relatively to other advanced nations.

The systems compared by WHO. The health systems in the UK and France are publicly funded, universal, and government run. The US system is half public and half private, where no one is guaranteed health coverage. The Singapore system is another part-public, part-private hybrid system, where the government provides most care for those who are least economically advantaged, and costs are variously shared between the government and the rest of the population.

Effectiveness. The US has the lowest life expectancy of the countries compared. This is no surprise, because there is little promotion of disease prevention, little outreach to those who are in chronic need, and little attention to promoting healthy life styles and good health practices. It is easy to conclude that, given the rich resources available, the US system is not effective at promoting and delivering good health.

Efficiency. Of the countries compared, the US expends the highest percentage of its GDP on health care. It is easy to see that the US system is highly inefficient at delivering health.

Equity. In the US, only 10% of non-Hispanic whites are without health insurance. 16.8% of Asians, 19.5% of blacks, and 32.1% of Hispanics are without health insurance. If the statistics divide so strongly along ethnic lines, it is clear that the US system is highly unequal.

Why the Right Opposes Health Reform. Health reform isn't welfare for the rich, that's why. Billions for Wall Street? No problem. Never mind that government programs are paid for by the people's taxes and are supposed to be for the public good. Billions for the public good? If it really helps the people, it's "socialism". Socialism for the rich is ok here.

Why Public Options Are Vilified. Ever notice how Americans say that they encourage entrepreneurial risk taking, but they only consider the upside of the risk? Rich entrepreneurs are wonderful, but if you take a risk and fail, obviously you didn't try hard enough. In fact, you are so lazy and stupid that you no longer deserve the right to life and liberty. No health care for you. Not that it's their fault, but neither do your kids. It is convenient to have people to blame.

Why Vested Interests Call It "Socialism". Powerful vested interests are trying to use twisted rhetoric to set the terms of the health care debate, and right-wing ideologues are happy to play along. It is very convenient for the powerful to taint public health systems as doctrinally "socialist", because they think that they can divert the American people from discussing the real issues at stake. If no one compares the economic and health benefits of alternative systems of organization, they won't notice how inefficient and unequal our current US system is. There really are alternatives to our inefficient, unequal system.

Why We Need a Public System. The only way to reduce health-care costs is to to provide health care consumers with the power to negotiate costs with their doctors, hospitals, drug companies, and others who provide the goods and services. This means a system of sufficient scale and create an authority that will enable private insurers to negotiate effectively ... or else let the Federal government do the negotiating itself. And the only way to promote freedom, equality, and opportunity in the US with an affordable system is to have a public health care system that provides care for all of us.