May 30, 2002


GOOD AS GOLD: Larry Kudlow says the rally in gold indicates reflation; monetary policy appears to be succeeding at getting the economy back on track. Gold is a leading indicator, though; I'm guessing that the really noticeable upswing could be several months off, with somewhat sluggish growth until then. Of course, this sort of thing is impossible to time, and anyone who says differently is lying.

I first learned of the importance of gold as a monetary policy indicator from Jude Wanniski, who takes a welcome break today from his crackpot geopolitical writings (he's a Saddam-apologist, among other things) to write about how a gold-anchored dollar would help the third world more than anything rocker-cum-debt-relief-expert Bono and Treasury Secretary Paul O'Neill talked about on their trip to Africa.

Wouldn't it be nice if the know-nothing protestors against the International Monetary Fund and the World Bank actually understood why the IMF/WB economists screw up everything they touch? Wanniski is great at explaining how IMF poison works. Sound money and pro-growth tax structures are verboten under the terms of their loans. The anti-globalists understand such things even worse than Keynesian economists.

Jude's "Memo on the Margin" today also touches on what a great finance minister Charles McCreevey of Ireland is, lauding him "for his courage in fighting the eurocrats and putting Ireland on a fast supply-side growth track." Ireland in the past few years has gone from the worst economy in Western to by far the best; we're talking 10% annual growth. If you want to start a business or a open a corporate branch office in Europe, Ireland is the place to do it, since no other country is both part of the Euro community and has a low-tax environment. My parents just got back from the Emerald Isle where, as soon as they left the airport, their cab driver greated them with "welcome to the Celtic Tiger!"

Posted by John Tabin at May 30, 2002 10:20 AM