The New Morality

It strikes me that so much of our political rhetoric is engineered to accomplish two ends:  simplify the issue for mass consumption, and frame it in a way that creates volitional momentum for the electorate.  I guess that’s kind of stating the obvious.  Maybe some issues really are like that . . . but I suspect that, more often than not, politicians and pundits are seduced by this framing mechanism as a political shortcut.  Why deftly wield a scalpel when you can forcefully wield a sledge-hammer?

Consider the current public debate regarding the budget and federal debt.  The Left appeals to some moral principal in the matter – “what would Jesus cut?” – assuming that just because the government does spend money on certain programs, it does so as a moral obligation.  Under this logic, government spending eventually absorbs the entire economy, and, like our Greek friends, people riot in the streets because the government won’t give them jobs.  I’m not exactly sure who is responsible for creating wealth in that model.

On the other hand, the Right, seeing the political expediency of a moral appeal, frames the issue of deficits and debt as a moral abdication of the highest order – the equivalent of stealing food from the mouths of babes.  These are the same people, mind you, who object to the alteration of the Social Security normal retirement age.  So the political dialogue is now largely a matter of who can more convincingly portray righteous indignation, and you merely have to decide which moral outrage you find particularly compelling.

Deficits are not intrinsically moral or immoral – this holds true even for BIG deficits.  It’s just a number.  The question is really about the utility of those deficits.  Suppose, for instance, the result of recent deficit spending had been a massive surge in investment, jobs growth, and productive output.  Or suppose someone had a magic crystal ball where everyone could see exactly what would have resulted without that spending, and saw some sort of post-Apocalyptic Mad Max scenario.  We would all be saying, “ah, good show, Mssrs. Bernanke and Geithner.  Huzzah.”  But, it didn’t and we can’t, so we don’t and we won’t.

In another little contrendium factoid, I would like to point out to conservatives (data provided below) that the Reagan administration embarked on a policy of almost unprecedented deficits, and conservative economists praise him for doing so, and that on three fronts:

1. it pitted the credit rating of the US against the USSR, effectively bankrupting and dismantling the Evil Empire without all the nastiness of assured mutual destruction.
2. by reversing increases in capital gains taxes, the Administration was willing to put current receipts on the line for the sake of investment and growth.  In retrospect, most economists agree this fueled growth and recovery, but it was probably ‘hella scary at a time of increases in defense spending and high interest rates.
3. in the perspective of dyed-in-the-wool supply-side advocates, it shifted wealth “to more productive utilization,” meaning the top, where it could be used for investment and growth.

In other words, the smartest thing Reagan ever did was run up a big deficit.  How we judge that decision now is through the effects.  How we judged it then was our belief about its anticipated effects.  And that, I think, is the real argument at hand.  I'm not arguing that deficit spending or the current level of Federal debt is a good thing.  I'm just arguing that the argument about morality is weak, at best.  If we want to avoid the accusation that we're being opportunistic and disingenuous, then we should get back to the real point.

Receipts, Expenditures, and Deficits (Inflation-Adjusted, 2005 dollars)

Federal Deficit as a % of GDP

The Valkyrie Rides Again

I have briefly mentioned in previous posts my confusion in the apparent “about-face” for conservatives with regard to immigration policy – namely, that conservatives are supposed to favor pro-business immigration policies that, admittedly, might have deleterious wage effects at the bottom of the economic ladder. At the same time, I observe that the fairer sex, even among conservatives, could be counted upon for a sympathetic response to the plight of the immigrant: “they just want what’s best for their children,” “they’re being exploited in their home country,” “they’re starving,” and reasons of a similarly incomprehensible nature. And while I am alarmed at the new Conservative Marxism, I am appalled, yes appalled, by the rise of the New Conservative Woman. "An ill wind that bloweth no man good-- The blower of which blast is she.”

The Palins and the Bachmanns and the Brewers and the Angles; these are no wilting flowers. They cleave their way through enemy ranks, wielding the shrill cry of “Man Up” like Thor’s Hammer. The message is clear. They have more testosterone pumping through their American veins than the effete East Coast literati, and if their own men won’t live up to their burly standards, they can grow chest hair for two.

“The lady doth protest too much, methinks,” I murmur (but not out loud, as “methinks” and “doth” would immediately identify me as an effete East Coast liberal). I propose that the entire agenda of Conservative immigration hysteria originates with and is impelled by WASP Female Self-Preservation. Let’s take a brief journey into the anthropological mists of time.

For the male of the species, self-preservation was largely a matter of the individual in question against the hostile forces of nature. To supply for himself and his family, he worked hard, toiled under the sun, breaking his back carrying animal carcasses hither and thither – but the success or failure of others in similar occupations were of no consequence to this noble savage. Of course, he might have had his disagreements, but these were honestly resolved by a sharp blow to the head from a rock conveniently at hand. But, just as often, he didn’t, because the yoke of Adam’s curse is lighter when shared. He needed to slip away from the family cave with his earthen pot of beer, and to talk to his brethren of the mammoth that got away – of that particularly spiteful tree stump – of the advisability of purchasing that plot of land down at La Brea. Sometimes, no words were needed. A quiet belch or two as the jug was passed around could more than sufficiently express the anguish of the male psyche. So much could be said with this simple gastric utterance.

For the female of the species, force against nature and foe were not an available option. She achieved her will through cunning, and her success was achieved at the expense of her competitors. “Well, you never see discarded bones outside the Thrack cave, do you?” “Sometimes I think you love fermented berries more than you love me!” “Oh, Sampson, you’re so big and strong!” Each word, each intonation, were carefully devised to achieve their accomplished end. Your average girl in middle school is capable of such subterfuge as would make a hardened KGB double-agent blush. When faced with a threat to her social supremacy, there are absolutely no lengths to which a woman will no go to destroy her competition.

And so, when I consider the cunning and devious mind of Woman, I hear a quiet little voice: “why are conservative women so passionately vocal about law enforcement and labor supply?” Is it merely a coincidental feminine fetish, like cucumber sandwiches, Pilates, or book clubs? I propose to you, conservative Catholic gentlemen, that there are darker, conspiratorial forces at work, here.

Consider your self-interest in the matter, gentlemen! On the one hand, you have a continent full of Latin women, just south of our border. They are devoted to the Catholic faith, they can cook (and they use lard, bless them!), and they don’t have centuries of Puritanical repression making them embittered and frigid. On the other hand, you have, well, not that. And what’s critically important is that WASP women are fully aware of the threat posed by their Catholic sisters to the South. They are determined, at any cost, to secure their death grip on all social capital in the US.

You can splutter and protest all you want, but I ask you, brothers, are you speaking your own mind, or are you blindly doing the bidding of the more powerful and devious Female Mind? Think about it. Or, you can “man up,” and let the WASP women do your thinking for you.

Conservatives and the New Social Contract

Defying a clear popular mandate, the author of Contrendium has not made the Great Celestial Checkout. He has simply assumed a new role at his company and moved his family half-way across the country.

I originally wrote this entry in December, shortly after Obama’s deficit reduction commission published the questionably ironic “Moment of Truth” document.

http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth12_1_2010.pdf

Although the content is a couple months “out of vogue,” I think the general observations still hold true, and my perplexity remains.

I’ve been wondering about the Tea Party’s newfound love affair with social entitlement programs. I have to admit – I am befuddled. Perplexed. One might even say “benighted.” Not often, of course, but one could.

I thought I understood the Tea Party movement to be a popular uprising against the encroachment of the Servile State; a renaissance of the ideals of American liberty and self-determination. So when the White House deficit reduction commission in December recommended some minor adjustments to Social Security eligibility (in 2050 and 2075), the Tea Party was the last place I thought to look for a hostile reaction. If anything, I expected the Left to view this as another indication of Obama’s betrayal of liberal values.

At first, I thought the response was simply jaded political posturing. Allow the enemy no quarter, and all that. After speaking with Tea Party faithful about this, I am persuaded this isn’t the case. “I’ve paid Social Security taxes my whole life, and the American Government needs to keep its contract.” Complete sincerity.

I don’t get it. First of all, look at it from a perspective of personal consequence. Most of them would be dead before the 2050 date, and I will be dead before the 2075 date (possibly earlier if my wife decides the insurance payout is worth it). It doesn’t affect our benefits. The people it does affect are just beginning to pay income taxes, so they have a clear expectation of retirement conditions at the beginning of their career. Which leads to the second point . . . whether social entitlement benefits are an obligatory “contract.”

Perhaps there’s a generational context, here. Given the demographics of the tax base during the Golden Years of “the Greatest Generation,” my grandparents could be reasonably assured of the viability of Social Security and Medicare. Their children seem to have a similarly sanguine perspective, while I fully expect Baby Boomers to attempt everything in their power to vacate the labor-force for an orgy of self-actualization, and to lobby heavily to make opiates and naturopathy allowable medical expenses under Medicare Part D. The disturbing thing here is the real and proportionally shrinking labor base left with the responsibility of funding The Last Great Trip. In 1950, there were 16 people in the workforce for every Social Security beneficiary. In 1960, that number had decreased to 5. Presently, there are 3 wage earners for every beneficiary, and in 2025, that number will be 2.3. The only hope of retaining some portion of Baby Boomers in the workforce and prolonging the Day of Reckoning is their legendary self-indulgence. They are crappy savers. When they eventually moved back home from their training in Ayurvedic Bowel Control in India and started saving, they had the bright idea of making up for lost time by loading up on “high-return” funds (also known as “high volatility), which is fine, as long as you’re not lookin’ like David Crosby. So maybe that plan didn’t play out so well, and they might decide to slog it out with the rest of us drones for a while longer. Regardless, they still view their Social Security benefits as real, while those in my generation view them as “aspirational.” We might get them, we might get a part of them, and we might not.

So there’s the issue of personal consequence, the skewed generational expectations, and lastly the question of definition and history. When did people begin to look at these social entitlement programs as a “contract for future benefits?” There were always pay-forward programs, meaning the current labor force was funding current benefit payments. Furthermore, the expectation of those payouts, at the time these programs were created, assumed a lower average life expectancy. When Social Security was created, average life expectancy was 64, meaning you would only expect to collect benefits for a couple of years. It’s now 78, but the eligibility for normal retirement age has not kept pace with that increase in life expectancy. The proposal of the commission was relatively modest – increase the normal retirement age to 68 in 2050, and 69 in 2075. Either we decrease the payout amounts, increase the age threshold, or increase the contributions of the current labor force. I thought the Tea Party would be with me on this one, but apparently, they are so fixated on some abstract moral principle that they will fight to the death to protect the entitlement programs they love to hate.

They say that extremes meet at some point. Atheists take on an air of religious fanaticism. Fascism and Socialism blend together in some sort of Statist nightmare. I guess I now see an entire movement of Libertarians espousing the virtues of New Deal social programs. Maybe there’s a subtle distinction in there, but it eludes me at the moment. I’m waiting to hear Sarah Palin speak of Eleanor Roosevelt as a “mama grizzly,” and then I will know we have arrived.

Only Foolin'

Sociologists might look back on the last six months, during my absence, as the “Dark Ages” of the 21^st Century. The all-night prayer vigils . . . the protests of self-immolation . . . the celebrity telethons . . . all deeply appreciated. No, YOU are a beautiful person, Ryan Seacrest, and you shouldn’t worry about anyone who says otherwise.

I was wondering if anyone caught this little op-ed in the Wall Street Journal on April 1:

http://online.wsj.com/article/SB10001424052748704050204576219073867182108.html

At first, I thought the WSJ had invited James Hoffa to join the staff as a contributing writer – a touching piece of Teamster’s nostalgia. Or, more likely, a cynical attempt to use the emotional tug of “American can-do” to generate public outrage at public sector employment. Perhaps I should explain.

I don’t think the story, here, is the replacement of manufacturing jobs with public sector jobs. That’s the headline, but it’s not the real story. If you bother to look at the data (in the spirit of my “all others must bring data” mantra, I’ve created two new WolframAlpha widgets for you to play with to see for yourselves), the real story is the shift of the US economy from a manufacturing to a service-sector market. The author expresses shock and outrage that public-sector jobs now outnumber manufacturing jobs in the Unites States. What he fails to mention is that manufacturing jobs only represent a small portion of the economy. From the ‘40’s through 2010, manufacturing in the US has declined from 40% of total employment to 14% (roughly), while public sector employment has increased from approximately 14% to 18% in that same period. ‘Dem numbers don’t add up, do they? The real shift was away from manufacturing towards services. In short, a lot of the “stuff” we used to make costs too much to produce here, so we have moved “up the value chain.” Although this shift put Akio Morita and the US labor movement all in a dither, orthodox, conservative economists viewed it as an inevitable consequence of market forces and globalization. Fighting the drift was like fighting gravity – smart money would find ways of exploiting shifting conditions to maximize wealth creation, eventually moving the US labor force into areas that emphasized intellectual capital, services, and technical know-how. Everyone recognized that shift would cause pain and displacement, but measures like import tariffs would only delay the inevitable, and would waste valuable time and resources that could be used to establish America’s dominance in sectors that had a real future.

So, what do you think – pro-Union, bleeding-heart liberal economics, or cynical rhetoric? It’s the Wall Street Journal – c’mon. Don’t get me wrong – I’m not happy about public debt and spending. But I still think you have to fight fair. I’m not buying the Normal Rockwell Assembly Line motif.

Progress and Its Critics: Conservatives and the Culture of More

The other day, my wife was telling me a story (sorry for the lack of attribution – I think it might have been in one of Laura Berquist’s books) about a boy walking along the beach with his parents. Looking at all the litter, he said, “It looks like the orcs were here.” Smart kid.

If you’re asking yourself, “who are the orcs, and should they form a Constitutionally protected class?” then you are either: 1)an attorney for the ACLU, or 2)certainly not a conservative Catholic. But I repeat myself. Orcs, my patient reader, are creatures serving in the armies of one of the evil wizards in JRR Tolkien’s Ring trilogy. They leave behind them a trail of slaughter and destruction, and hate everything good, true, pure and free. Wherever they go, trees are uprooted, people displaced, farms destroyed, and machinery and factories belch out their pollution. These same images and themes occur in the writings of CS Lewis, especially in Prince Caspian and The Last Battle, as well as the first and third books of Lewis’ Space Trilogy. The enslavement of men and the destruction of nature are represented as going hand in hand. Forests destroyed, villages leveled, mountains blasted, roads paved, rivers dammed. Rules are enforced, liberties curtailed, rural regressives are relocated and reprogrammed. A literal and figurative smog descends on the land, blotting out everything. Lewis and Tolkien are not describing a futuristic dystopia. They are describing the here and now.

What I think they both saw, and what is critical for us to keep foremost in our minds, was the very real war between the “theoretical more” and the “real less.” We are in very real danger, as Catholics, of being seduced by the Theoretical More – the Siren Song of “Progress.” We must take a stand, and demand an accounting. More for whom? At what cost? Will we be better off in the end? What, and whom, must we sacrifice to achieve this “progress?”

My concern is that we, as a community, may have forgotten the identity of our true enemy – or at least we are allowing ourselves to choose in a false dichotomy. On the one side is the despair of Pantheism: sterilization of the masses, euthanasia, and a desire for the conscious mind to dissolve in the animal pulse of desire and the rhythmic flow of sap. We rightly protest, saying, “but the human soul is unique in creation, and the world is intended for man’s use and benefit.” And so we flee into the camp of the orcs, burning, tearing, fuming, digging, without restraint or conscience. We forget that conservatives were the original conservationists. We have never been willing to accept this vague notion of Progress as any sort of self-evident good. Wider asphalt roads? Hurts my horseflesh and tears down my hedges. Motorboats? Damned things scare off the fish. Digging up half of Africa to find some diamonds? Perfect – you democratize diamonds and my wife will just want something more elusive – fairy tears, or some such nonsense. Can’t be bothered. Now leave me alone. THAT is conservative, my friends.

The slavish devotion to industry, productivity, and the “march of Progress” is, in its own right, a religion – the religion of Materialism. More, further, faster! Shinier, louder, bigger, higher! See the work of man and the grandeur of his creation! So, question for you: in rejecting the “enviro-Nazi’s,” have we fallen into the trap of the Breathless Boosters of Modernity? Are either of those legitimate options? Do we have to cast our lot with one or the other? Conservatives are almost gleefully indulging in industrial and consumerist excess. The sprawl of development for 10,000 square foot McMansions. The gas guzzling SUV for the trophy wife and 1.5 children. The invasion of natural solitude with the whine of the jet-ski. Anytime someone voices concern over leach-mining, clear-cut logging, pesticides, or carbon emissions, suddenly they’re the enemy? “Drill baby, drill!”

When did this change happen? When did we go from being “a pint and a pipe” people to “a martini in the penthouse” glitterati? When did we abandon modesty and restraint? When did we abandon our posts as caretakers, and take up the banner of conquerors?

Sometimes, less is more.

The Egotists’ Club is one of the most genial places in London . . . the club is not specially exclusive. Nobody is ineligible per se, except strong, silent men. Nominees are, however, required to pass certain tests, whose nature is sufficiently indicated by the fact that a certain distinguished explorer came to grief through accepting, and smoking, a powerful Trichinopoly cigar as an accompaniment to a ’63 port. On the other hand, dear old Sir Roger Bunt (the coster millionaire who won the 20,000 pound ballot offered by the Sunday Shriek, and used it to found his immense catering business in the Midlands) was highly commended and unanimously elected after declaring frankly that beer and a pipe were all he really cared for in that way. As Lord Peter said again: “Nobody minds coarseness, but one must draw the line at cruelty.”

–Dorothy Sayers, “The Abominable History of the Man with Copper Fingers”

Now that’s hide-bound. It’s tasteful and restrained. It’s conservative. If nothing else, it shows a proper respect for an 1863 port.

P.S. Fun reading, when you have the time: The True and Only Heaven: Progress and Its Critics, by Christopher Lasch.

Dumb and Dumberer: The Beatification of Ayn Rand

“Oh, those poor people!”

“Somebody didn’t get out of that in one piece.”

I had just caught the last 45 minutes of the film adaptation of Ayn Rand’s The Fountainhead, starring Gary Cooper and Patricia Neal. It wasn’t so much of a movie as it was a community theater production of a 19-year old philosophy major’s “magnum opus.” That’s unfair . . . Cooper and Neal are fine actors, and did justice to the material. The stoicism of the persecuted hero. The visionary whose creative act is its own end. The 20^th-century narcissistic obsession with technology and the conquest of nature. The unmistakably phallic architectural symbolism. The speeches – oh, the interminable speeches of the beleaguered hero, reviled by the parasitic masses and the bureaucrats who control them. The juvenile, self-pitying fantasy of the misunderstood artist persecuted by all but the elect few, who cast themselves at the feet of creative genius. Miss Rand may have escaped communist oppression, but she certainly managed to create her own Soviet aesthetic on this side of the Bering Strait.

For the life of me, I cannot understand the conservative obsession with Ayn Rand . . . certainly not the embarrassed apologetic offered by the Catholic element of the conservative movement. I suppose it can only be explained by the belief that “the enemy of my enemy is my friend.” Are today’s Catholic conservatives so ill-equipped to deal with relativism and state collectivism that they actually think Rand offers some meaningful foundation and bulwark for our world view? Doesn’t anyone read Aristotle and St. Thomas any longer? Anybody heard of that guy, Leo XIII? Pius X? Ringing any bells, anyone? Have we become so hostile to the intellectual life, our standards so debased, that Ayn Rand actually represents our new moral and philosophical high ground?

What ever happened to the conservativism of only fifty years ago? Whittaker Chambers, writing for the National Review, published what has to be one of the most brilliant critiques of Atlas Shrugged.

http://www.nationalreview.com/articles/222482/big-sister-watching-you/flashback

Flannery O’Connor wrote to a friend that "The fiction of Ayn Rand is as low as you can get re fiction. I hope you picked it up off the floor of the subway and threw it in the nearest garbage pail. She makes Mickey Spillane look like Dostoevsky."

So now because she has the endorsement of Glenn Beck and Rush Limbaugh, she’s suddenly OK? Her support of the Barry Goldwater campaign gives her Catholic street cred?

Rand’s atheistic worldview, in which the dollar sign replaces the cross, and the expression and fulfillment of the Creative Class becomes the ultimate teleological framework, is so closely allied to Marxism and the errors of modernism that I’m incapable of distinguishing them, philosophically. Whether the object be “the common good” or the good of John Galt, all of the assumptions (at least the important ones) seem to me to be the same. She may appeal to some common social good, but only in her moments of inconsistency (which are constant), and only as an accidental result of the creative acts of the hero class, rather than their intended object and purpose.

The only explanation I have to offer for the infatuation that conservative Catholics seem to have with Ayn Rand, the only explanation for a movement that, by its own stated purpose is committed to the return of godliness and Christianity to the public forum, and is now singing the praises of an adulteress, modernist, and neo-pagan, is that we are the product of the education system we love to hate. We are so stupid, so illiterate, so much a product of the moment, that we are incapable of formulating a cogent response to left-wing secular Statism, and trip after Ms. Rand like rats after the pied piper. Pathetic.

Buy High, Sell Low: Gold and the Efficient Market Hypothesis

So I’m going to go on record, and place conservatives’ gold fetish squarely in the Pantheon of Kookery (effectively squaring the circle). Gold spot price today . . . $1256/oz. Let’s check back in a year and see how this all plays out.

The Acolytes of Aurum are a diverse group. There are the Harbingers of Doom: Cassandras who foresee (or desire?) a complete collapse of world currencies. These people aren’t buying gold futures – they actually want bullion. These are the “get your guns and gather the women and children” crowd, and most of them are listening to Glenn Beck. Or maybe they don’t actually believe in utter catastrophic ruin. Maybe they just disagree with the Administration’s pro-deficit policies, and buying gold is a way to register their intense dissatisfaction with said policies. Personal investment as a form of political protest. Now that’s putting your money where your mouth is.

Then there are the Austrian Dogmatists (e.g. Lew Rockwell), who harbor a deep-seated, lasting hostility for “fiat currency.” They have always believed that control of the unit of exchange by the Treasury poses an irresistible temptation – the monetary equivalent of the fox guarding the hen house. Whatever the merits of their case in principle, with the Administration bandying words like “Trillion” in relation to the fiscal deficit, and Biden reassuring the left-wing faithful that “we can do something really big” probably means the case in fact warrants some serious consideration. But to be clear, the case under consideration is a case for restraining the Treasury (reverting to a gold standard being one popular proposal) - not a case for investing in gold. In the minds of some, the gold conversation has become so dominant that they fail to maintain this distinction. "Monetary expansion bad. Gold good. Buy gold."

Lastly, there are the Arbitrage Cynics. They’re not betting on the basis of fundamentals. This is not T. Boone Pickins’ argument about BRIC development and long-term demand driving oil above $100/barrel. It’s not even a bet about the consequences of fiscal policy and debt. It’s a bet about people’s perception of these things, and the flight to gold for security. It’s about anticipated moves in the market, not about the relative worth of the assets in consideration. This group essentially admits that there’s an anomaly in the market, and they intend to exploit that anomaly.

http://www.businessweek.com/news/2010-03-01/soros-signals-gold-bubble-as-goldman-predicts-record-update1-.html

You’ve got to at least admire the raw guts and audacity of this position.

“I absolutely believe it’s heading into a bubble, but that’s why you buy it,” said Charles Morris, who manages $2.5 billion at HSBC Global Asset Management’s Absolute Return Fund in London.

Basically, Mr. Morris is admitting it’s a game of musical chairs, but he intends to get out before the music stops. Hope you can, too.

Who knows? Maybe some of these people are right. Maybe all of them are right. But the thing they share in common (and it’s remarkable to see George Soros and Glenn Beck in such amicable agreement) – the thing that you would especially not expect to see from advocates of the free market, is that all of these people are betting against the efficient market hypothesis. I guess, in a way, any attempt to time moves for individual securities is a bet against market efficiency, but I mean something more particular than that.

The efficient market hypothesis postulates that the crowd effectively assimilates available information to determine a market-clearing price; an optimal price that induces the most sellers into the market to meet the demand of the most buyers. The price in the market reflects whatever information is available, more or less. In this sense, there is something refreshingly Aristotelian about the efficient market hypothesis. It recognizes a kind of wisdom in common experience and interaction, and uses this as a beginning point. This doesn’t mean that every price is always “right.” There is still plenty of room for “asset bubbles,” and human greed will always inspire the hope that there is a sucker out there who will overpay. But that is the basis for asset bubbles: a hope in the stupidity of the other guy, and therefore a hope in the temporary suspension in the rules of an efficient market.

The Harbingers of Doom aren’t really betting on a probable run-up in the price of gold in the case of catastrophic economic collapse. If their vision comes to fruition, ammunition, livestock, firewood, and a vegetable garden are probably more prudent investments. Shiny yellow metal won’t keep you warm at night.

The Austrian Dogmatists aren’t betting on 30-year Treasury yields. If they were, they would just take a short position or buy another currency. Their concerns might be based on macro-economic fundamentals, but there’s nothing fundamentally valuable about gold, except its performance as an efficient conductor of electricity. It’s malleable, has a known molecular weight, doesn’t oxidize, and is a solid at room temperature. So what? The bet, here, is not that it should run up with increased risk of inflation, but that the insecurity and fear of others will drive it up. It’s a bet on panic, not on intrinsic value.

At least the Arbitrage Cynics have the most intellectually honest (although the most morally perverse) position. With a shrug of their shoulders, they say, “eh . . . lemmings. What can you do?” Might as well make a quick buck if everyone is going to be stupid, right?

Any time the driver of an asset price is a bet on the stupidity of the other guy (whether it’s paying an exorbitant price for a home or an ounce of gold), that seems, to me, a risky proposition, not a safe one. I am not going to bet that the market will be able to continue on the basis of irrational greed and fear. True Conservatives should know better . . . and Catholics should behave better.