Why Cranks Love Gold

The calamity now overtaking Greece, the miserable consequences of the fatal decision to join the Euro by a country unqualified for membership, reminds me of an observation offered many years ago by an economist friend.

He was explaining why cranks from Major Douglas to Ron Paul have so often been attracted to monetary policy, as opposed to other less-arcane policy topics.

My friend: "The consequences of bad monetary policy are so catastrophically bad—German hyperinflation, the rise of Hitler, World War II —that it's natural to think that the consequences of good monetary policy must be correspondingly good: the emerald city of Oz arising in the South Bronx, that kind of thing. But in fact, bad monetary policy is like drinking arsenic, and good monetary policy is like not drinking arsenic. It doesn't extend your life by a single minute."

But drinking the arsenic sure shortens your life, and bad monetary policy can plunge a troubled but nonetheless functional society into apocalyptic catastrophe.