On Buiter, bubbles, bullion, bitcoin and baloney

I must confess I did not know who Mr. Buiter was until yesterday, when I read his research note on gold and bubbles.  I thought his note was stimulating, not because I agree with more than a sliver of his arguments, but because it forced me to rethink and comment.

Mr Buiter’s stated aim is to show why he thinks it is a bad idea for the Swiss to vote a rather unfortunate jumble of legislation about gold backing for their economy.  Incidentally, yesterday the Swiss ended up voting down the proposal, which was probably in their best interest, although it would have been a lot of fun if they had not.

Although I tend to agree with Buiter’s position, I strongly feel that the piece is either not particularly fortunate in choosing supporting arguments or plainly directed at pushing another agenda.

I wish I could summarize Buiter’s argument , but I find it impossible, since the different topics definitely do not follow logically from one another, but rather bubble up spontaneously along the pages.  I therefore wish you read my point by point comment.  Here: (Buiter on Gold_Citi_27 Nov 14 commented by Claudio) you can see the Citi research paper by their chief economist, Mr. Willem Buiter, with paragraph by paragraph comments by yours truly.  By the way, his current paper is a remake of a blog post he wrote in 2009, before he or I had heard about bitcoin.

Without no real argument, Buiter says that gold, paper money and bitcoin are equally subject to the risk of hyperinflation, redefines fiat money to mean all money, states that any currency value is a bubble and stretches his own data to infer that gold should be worthless.

The funniest part, though, is how he sprinkles bitcoin wisdom and misconceptions, totally disconnected from the Swiss referendum. Other people have commented on this, including a vocal Fed official.  I cannot ascertain and dare not speculate on what Mr. Buiter’s and Citi Research’s real agenda is, but it sure is intriguing.

Please note this is not the original pdf doc, although it is a bona fide copy.  In order to comment on the research piece, I had to convert it to a word doc and then back to pdf.  I did not change it other than by adding the comment bubbles (yes, bubbles), but here is the link to the original article.

 

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