On Mint... And Gold

I thoroughly enjoyed reading my copy of Mint first thing this morning. The lead editorial on the rights of street vendors is noteworthy, and commendable for a business newspaper. Yes, the poor need The Market.

Liberty!

At the bottom of the same page, Niranjan Rajadhyaksha, editor of the paper, writes of the harsh reality of total government failure. He concludes:

It has often been said that the Indian state does too little in some areas and too much in others. That is the whole point of economic reforms: A free economy can boost growth and thus provide the government with tax revenues to spend on what should be its key functions. Administrative reforms and rebuilding of state capacity have to be important parts of this transition.

I liked the word “transition.” It implies we must immediately commence restructuring the apparatus of our The State, and thereby head towards a better world we can all visualize, of liberty, property and justice. It is this malfunctioning State that is holding this talented and gifted nation back.

In the inner pages, all of them quite interesting, there is a hilarious column on Mao and Keynes (and the RBI) by Manas Chakravarty – but I could not find it on the website. It is well worth a read. I liked "a spectre is haunting the world - the spectre of Keynesianism." Ha ha.

But topping them all was a piece by A.M. Godbole at the bottom of the op-ed page on the need for “gold banks.” I could not agree more. Further, I do not see any regulatory reasons why such gold banks cannot be freely established under traditional commercial and legal principles – like Property and Contract.

In my travels in the western Ghats of Karnataka, I noticed that there were indeed many such “gold banks” in the towns – even the smallest ones. In Bangalore, during a severe financial crisis, I even had the opportunity to pawn my laptop with one of these establishments – and that was what saved my skin. While taking custody of the laptop (containing all my works) the informal banker (not bankster) assured me with these words:

“We are more honest than the RBI.”

Frankly, given the huge monetary inflation that looms ahead, gold banks run under basic legal principles will be a huge success. A huge amount of gold will flow into them as people everywhere seek refuge from monetary inflation in all fiat currencies. This is precisely why the Bank of Amsterdam became the biggest bank in Europe (praised by both Adam Smith and David Hume) while France and Britain were both in financial turmoil. It is interesting that, after India, France is the nation with the biggest private hoards of gold. There are now ATMs in Germany that dispense gold coins.

So Godbole’s piece is important. It is in the direction of sound money and legitimate banking.

Good paper – Mint. Good job they’re doing. Excellent product, excellent website. It’s something about start-ups – they try harder. And usually succeed.

And don’t forget – I write there too.