And Rightly So

December 22, 2008

At the Conservative Book Club, we typically offer new books when they're published -- or even before. Exhibit One: the much anticipated new Ann Coulter.

But occasionally we select a book whose relevance -- or wisdom -- or importance -- doesn't become clear until some months after its publication. Buy Gold Now is one of those books. Here I’d like to lay out the very unusual history of how we came to offer this particular book in the Club at this particular time.

Buy Gold Now was brought out in March of 2008 by a publisher whose catalogues are a regular part of my reading diet. But last December -- I usually see books about three months ahead of their publication dates -- gold didn’t seem to be near the top of the list of things conservatives would be interested in. But by July, it was becoming clear that the economy was in trouble. We bought Buy Gold Now with the intention of offering it in the Club in the next month or two.

And then I got cold feet. Or pangs of conscience. Or something. I suddenly wasn't sure that, in the middle of a financial crisis, I wanted to send our members a hard pitch for a book that gave very definite financial advice that I wasn't yet ready to follow myself.

Through the end of the summer and into the fall the question I kept asking was "Inflation or deflation?" Just when everyone expected prices to keep rising, they were beginning to fall. Hyperinflation was entirely believable (in which case buying gold was a great idea), but then so was Great Depression-style deflation (in which case gold was a terrible mistake). Our government was handing out billion-dollar bailouts like candy; the country (and our dollar) were sure to be ruined, but then -- as Adam Smith famously remarked -- "There's a deal of ruin in a country."

But one thing is becoming all too clear. The folks managing our economy seem to share one unquestioned assumption: everything must go on as before. The current crisis looks to me like the first alarm bell warning us that you can't live on debt (government's using deficit budgeting and depending on bonds sold to the Chinese; investment bankers' "leveraging" everything that wasn't nailed down to hitherto unimagined limits; consumers' running up the credit cards and using serial refinancing to spend ever more) forever. But that thought doesn't seem to occur to the Treasury Secretary and his colleagues. The headline in this morning's Washington Post is "U.S. Moves to Revive Consumer Lending," which -- as The Big Ripoff author Tim Carney (This month's Superbargain) has pointed out -- is exactly the same thing as reviving consumer borrowing. It's been clear for at least the last decade that consumer spending and debt are out of control in the United States. Suddenly the fact that banks and consumers are exercising some long overdue self-control is supposed to be the problem?

So here's my wild guess (let me remind you that I'm an English major, not any kind of financial guru) about what's going to happen next. We may have deflation for a while, as people recoil from the excesses of the recent past and try saving for a change, depressing demand and bringing prices down. But sooner or later, surely we're bound to have inflation? I read recently that the TARP alone, that original $700 billion Paulson talked the Congress into, is something like 30% more than the total cost of the New Deal. And new bailouts seem to be added every day. When a Republican administration seems not to be able to see beyond a hair-of-the-dog-that-bit-me remedy for out-of- control risk and debt, what hope is there that we'll do anything but keep vainly trying to borrow and spend our way out of this mess? And how can that not, at least eventually, end up debasing our currency?

In short, I'm ready to Buy Gold Now -- at least some gold, with the intention of holding onto it for the next few years through these rocky times. So I feel that I can recommend the book to you.

--Elizabeth Kantor

andrightlyso@ConservativeBookClub.com