India’s recent woes include unusual drought, a massive electric outage, and a persistent economic downturn. “India’s growth is slackening, its national deficit is growing, and inflation is rising after having fallen between early 2010 and early 2012. Plans to build a more inclusive nation are in disarray. Income equality has risen,” wrote Pratap Bhanu Metha in the current issue of Foreign Affairs. “And access to basic services, such as water, health care, and sanitation, remains woefully inadequate.”
India, however, is suffering from another blow. The Wall Street Journal recently reported: “A sputtering start to this year's monsoon rains has forced farmers in India to put their gold-buying plans on hold.” Reporters Tatyana Shumsky and Biman Mukherji wrote: “With crops wilting without the heavy seasonal rains that usually start in June, some farmers say it is unlikely they can afford the gold jewelry that is the centerpiece of most Indian weddings.
As the world's biggest consumer and importer of gold, India helps set the direction of gold prices. The root of much of the demand comes from India's countryside, home to hundreds of millions of farmers who often bear the burden of adorning their daughters, nieces and sisters with solid gold necklaces, bracelets and earrings.
The Bombay Bullion Association, India's main gold industry group, estimates that the volume of the country's second-quarter gold imports slid 60%, to 128 tons, from the year-earlier period, due largely to the weak monsoon so far. Before the start of rainy season, the group forecast a roughly 20% drop in gold imports for 2012, due to a weaker rupee, which makes gold more expensive for buyers in India, and widespread closings of jewelry stores earlier this year to protest new taxes. Now, it is projecting a drop closer to 40%.
Ironically, India’s appetite for gold has contributed to its current economic problems. According to the Business Standard, “India's huge gold imports in the last financial year at $60 billion was partially responsible to high current account deficit, Prime Minister's Economic Advisory Council Chairman C. Rangarajan has said.”
It has been a bad summer in so many ways for the populous subcontinent. India’s gold woes were reflected by the country’s performance at the London Olympics. Hopes for a gold medal performance by freestyle wrestler Sushil Kuma, a railway worker, were stymied by Japan’s Tatsuhiro Yonemitsu. Kuma had to settle for a silver.
For Indians awaiting marriage, settling for silver is not acceptable. For the world at large, settling for anything less than the gold standard should be equally unacceptable.
George Gilder, whose new book publishes today, is one of the original pillars of Supply Side economics. As stated by Discovery Institute, which he co-founded, “Mr. Gilder pioneered the formulation of supply-side economics when he served as Chairman of the Lehrman Institute’s Economic Roundtable, as Program Director for the Manhattan Institute….”
He was the living writer most quoted by President Reagan. And he is back with his most brilliant work yet — one of potentially explosive importance if taken to heart by our political and policy thought leaders. It is a radical guide, with surprising insights on almost every page, to the creation of a new era of vibrant prosperity.
As reviewer Paul Brodsky, a professional investor in New York City, perceptively notes,
"Lewis Lehrman is one of a very small group of contemporary gold advocates able to successfully bridge the gap separating practical conservative intellectualism from fleeting, half-baked idealism. His CV lists great success across many fields including education (degrees and teaching fellowships from Yale and Harvard); industry (past president of Rite Aid); politics (narrow loser to Mario Cuomo in the 1982 New York governor’s race); finance, (past Morgan Stanley managing director); private sector entrepreneur (founder, L. E. Lehrman & Company); public sector advocate (founder, Lehrman Institute); historian (author, Lincoln at Peoria: The Turning Point); and recognized philanthropist (awarded the National Humanities Medal by George W. Bush in an Oval Office ceremony). ... Only someone erudite and elegant in demeanor could hope to pull it off . In an irreconcilably over-leveraged world where irritated bond vigilantes question economic sustainability and angry Tea Partiers protest the immorality of it all, Lehrman’s views are considered and his convictions carry weight. He brings gravitas to his cause, and he does so from within as a member of the club."
Before the Fed: JP Morgan Summons the Bank Presidents
"Finally, on the night of Sunday, November 2, Morgan summoned the presidents of the major New York banks to his new library, at the corner of Madison Avenue and Thirty-sixth Street, an Italian Renaissance-style palace he had built next door to his house to showcase his collection of rare books, manuscripts, and other artwork. Its marble floors, frescoed ceilings, walls lined with tapestries and triple-tiered bookcases of Circasian walnut, crammed full of rare Bibles and illuminated medieval manuscripts, made it an incongruous setting for a meeting of the banking establishment. Once the moneymen had gathered, Morgan had the great ornamental bronze doors to the library locked and refused to let anyone leave until all had collectively agreed to commit a further $25 million to the rescue fund."
— Liaquat Ahamed, Lords of Finance (Penguin Books, 2009, p. 54)
Lately we have been engulfed by headlines reporting financial turmoil on every continent, in almost every nation, large and small. The commissars of central planning who so marred the history of the 20th century have been replaced by central banks in the 21st. In Cyprus, the new leadership now dares to confiscate citizens’ wealth with a one-time tax of up to 60 percent on bank deposits above 100,000 euros. Self-interested prime ministers blame continental monetary policies for instigating the currency wars that they themselves surreptitiously carry on.
The value of the yuan has been slowly rising. The value of the Japanese yen has been sharply falling. Abenomics is attempting to reflate the Japanese economic – slowly, slowly. “Japan is back!” Prime Minister Shinzo Abe tells the Japanese.
Coming back isn’t easy. The Financial Times’ Jonathan Soble has noted...
A recent front page Wall Street Journal article was headlined: “Miscast BRICs Lose Way.” Francesco Guerrera wrote that ‘the concept has come under unusually heavy attack, partly because of poor investment performance.” The basic BRIC was first laid by Wall Street strategist Jim O’Neill, who still defends the BRICS as...