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What Glitters in India?

December 6, 2005

A perennial among the nostrums of statist "economists" is complaining about the populace's penchant for buying and holding precious metals, notably gold. The French used to be mentioned frequently in this vein. FDR, of course, just made it illegal for Americans to own gold bullion or coin after 1933.

So it's tiresome and worrisome to see the Christian Science Monitor chiming in with an actual FIGURE for what percentage of economic growth the Indian economy loses each year to the ownership of gold and other such reliable stores of value. Not addressed is the possibility that, if forced to invest money they spend on gold, Indians might choose to invest outside India (that is, as long as they are allowed to do THAT).

Of course, from a different viewpoint, one might ascribe the same or even a greater shortfall of economic growth to the combined effects of the government's suppression of a medium of exchange whose long-term value people could rationally place some faith in, and its oppressive, not to say corrupt, regulation of its financial markets generally. One wonders just what Diana Farrell (quoted in the article) has in mind when she mentions "serious financial reform."

I think we can be pretty sure she has nothing in mind resembling what any Austrian would.

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