Investor John Hathaway’s article Interest Rates and “The Death of Gold” presents his thoughts on the relationship between rising interest rates and the US$ price of gold, financial mismanagement by central bankers, the manipulation of the CPI to hide inflation, and America’s over-leveraged financial economy. In particular, Hathawy critiques the widespread belief in the ability of a small group of omnipotent and omniscient mandarins to guide the economy to their desired result:
“Investors continue to buy into the notion that this or that government official can pull a few levers and make things right again,” says David Lewis, a former New York FX options trader. There is an unstated assumption that economic outcomes can be achieved through adherence information known only to a small circle of practitioners. The proper examination of arcane data somehow yields clues as to whether or not to raise interest rates. The totality of capacity utilization rates, unemployment claims, PPI, CPI, the Taylor rule, productivity and countless other “objective” data points comprise the compass for economic policy. In his excellent study of financial market risk “Fooled by Randomness,” Nassim Nicholas Taleb remarks: “Psuedo science came with a collection of idealistic nerds who tried to create a tailor-made society, the epitome of which is the central planner.”
