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(This item originally appeared at Forbes.com on March 11, 2025.) In our 2022 book Inflation: What It Is, Why It’s Bad, and How To Fix It, we said: When the price of gold rises – in other words, when more money is needed to buy an ounce of gold – that usually means that the dollar’s value has decreased. … Daily price movements may not be significant. But, if the price goes up and stays there for an extended period, or if it fluctuates but the general trend is up, that signals a downturn in the value of the dollar. (p. 100) When we wrote this, it took about $1800 to buy an ounce of gold. Today, it is more like $2900. That implies an $1800/$2900=0.621 or a 38% decline in dollar value over that period. Prices will eventually adjust, over a period of years, to the new, lower value of the currency, with some prices moving faster and some moving slower. “All things being equal” (they never are but it is a good principle), we should expect a $2900/$1800 or 61% rise in prices of goods and services going forward, compared even to the inflation-boosted prices that we have had to get used to in 2022-2024. Compared to prices in 2018, when it took about $1200 to buy an ounce of gold, we should expect a $2900/$1200 or 141% increase in nominal prices. Doesn’t seem like much fun, does it. This is why we say “you can’t devalue yourself to prosperity.” No country ever got rich with a weak currency. They get rich with a stable and reliable currency, which means: a currency of unchanging stable value. You would have to increase your nominal income by 141% just to break even. Maybe more than that, on an after-tax basis. Even

Today we come to one of the core elements of Economic Nationalism, which is not the economics, but the Nationalism. Economic Nationalism series In practice, this leads directly to economics as well. Why are America and Canada the only wealthy countries in all of the Americas? It has something to do with their British heritage, which has led to certain political outcomes, which in turn lead to economic policy. I have put off writing this item for a while, because it is hard to express properly the idea of the Nation, and what it means for human social organization. Here’s a description of Aristotle’s idea of the “philia”: I will have to collect some better and additional examples to this over time, perhaps from the writings of Ibn Khaldun, Arnold Toynbee, or John Glubb. Here is Glubb’s description of the early stages of National success: The characteristics of the Nation are a combination of enough similarity of thought and background (and language, religion and so forth) that a group of people can effectively work together to achieve some kind of positive outcome for the group. Any short reading of the Founders of the United States shows how rare and precarious good government is. Glubb then goes to show why empires (and nations) decline: Here’s the “Tytler Cycle”: Note again that success begins, and is sustained, by “Unity and Deep Moral Groundings.” I am sure that someone else can express these concepts better than I am doing here. Anyway, the result of all this, over a period of many centuries, was the idea of the “Nation-State.” In other words, State boundaries and jurisdictions should be defined by, and separated by, Nations. Against the “Nation State,” we can contrast several other common situations: The Multi-State Nation, such as Germany before 1871. One

(This item originally appeared at Forbes.com on February 13, 2025.) The United States was founded on Free Trade. And, high tariffs.  Free Trade applied between the States. The new Federal Government was given specific powers over Interstate Commerce, to prevent the States from erecting tariff barriers against each other. States were not allowed to establish their own tariffs on foreign trade. The Federal Government applied a uniform tariff throughout the United States. It was one of the principal sources of revenue, in the Nineteenth Century. Domestically, the United States had exceptional economic policy. There were hardly any taxes, and the currency was reliably fixed to gold. Trade was Free between States. With what I’ve called “The Magic Formula” (Low Taxes and Stable Money), the US got rich – even with high tariffs with the rest of the world.  Immigration was highly restricted during the first half of the Nineteenth Century. No significant immigration took place until a burst of Irish immigrants, fleeing the Irish famine and British oppression, in the 1840s. In 1830, 98% of the US population was native-born. Even until 1890, almost all immigration came from Britain, Ireland, Canada, and Germany (England’s medieval ancestors). The tariffs themselves were extremely problematic, however. They invited extreme overcomplexity, with different tariffs for different goods, and even for different countries, with rates that changed suddenly. Every tariff rate became an object of political contention. High tariffs were an object of chronic disagreement between the North and South, which was only exacerbated when the election of Abraham Lincoln resulted in still-higher tariffs. During the Nineteenth Century, the United States ran a persistent current-account deficit with the rest of the world, which basically reflected the desire of foreigners to invest in the booming United States. This arrangement changed with the introduction of the Income Tax in 1913. Now, there was an alternative

For 2024, my book count dropped again, to rather low levels. This is also because the books are big: Thucydides, and especially Gibbon, are long, slow reads. In regular book format, Gibbon chapters 1-40 would probably be about 2000 pages. (I am reading the Great Books of the Western World edition, which is so tightly printed that there are actually two columns per page. The six-volume Everyman’s Library edition has 3980 pages.) Gibbon is great fun, and certainly worthwhile. You have to read it quite slowly to follow the narrative, and catch the significance. I would sometimes read aloud, by myself. Build Your Own College series For 2025, I plan to continue with Durant’s Story of Civilization (#4, The Age of Faith); read the political works of Plato, Aristotle and Cicero; and continue with the Harvard Classics of Fiction, where the next step is Hugo’s Notre Dame de Paris. I think I will take a little break from Gibbon, but will follow up later with his tale of the fate of the Byzantine Empire. This doesn’t seem like too much of an agenda — only one big book, not three as in 2024 — but I think it will still be enough to exclude a list of more contemporary works that I would like to read, or other works of economics, which were light this year. Not everyone needs to undertake this kind of intensive “liberal arts” education. I think the effort to spread this kind of education to the masses, after 1950, was mostly a failure. It is an exclusive club, and you should already know if you are in it, because you want to be in it. But, we should have a few people who are educated to this degree. In the past, it was maybe 5% of

(This item originally appeared at Forbes.com on January 25, 2025.) Today, we are seeing a lot of the institutions and bad ideas of the Post World War II Consensus breaking down and collapsing. Among these is the rather stupid notion that economies should be managed by some combination of currency and interest rate manipulation, and “fiscal stimulus” spending that amounts to utter waste, for the simple reason that it has no justification except as “stimulus.” These are the conclusions of “Keynesianism,” which has been taught in all universities since the 1940s. Note how this is completely opposed to what I’ve called the Magic Formula: Low Taxes, and Stable Money. This is the Formula that enabled the United States to become the wealthiest country in the world, and the same Formula that enabled Japan or China to achieve similar results more recently. If the US sadly deviates from this Formula today, nevertheless taxes are Lower, and the currency is more Stable, in the US than in most any other developed country today. We see that it takes more and more dollars to buy an ounce of gold; and also, more and more euros or yen. This is probably a reflection of a declining value of the dollar, euro and yen themselves, rather than any change in gold. The average price of a hamburger in New York City, in 1950, was $0.10. Today, it is a lot more than that — and still rising, at a rate that is quite unpleasant to anyone who gets hungry in Manhattan. Is there some shortage of hamburgers? Or maybe too many people have a job? (Economists keep telling us that the solution to “inflation” is more unemployment.) No, the reason that hamburgers cost a lot more now is because the dollar lost value during that

I really enjoyed Specialization and Trade: A Re-Introduction to Economics (2016), by Arnold Kling, and published by the Cato Institute. A long time ago, I decided, or you could say discovered, that most establishment, academic economics was bunk; or at least, not very useful, and plain wrong on a number of important points. Thus I began studying these topics on my own, and soon discovered that there were other, similar people, especially the Supply-Side group which I consider myself a part of. This has been quite productive, but the consequence has been that I am not really that familiar with conventional academic economic dogma, as would be a person who has gone through that whole process, perhaps getting a PhD from a major institution. The problem of such people is that they are almost never capable of overcoming their mediocre and erroneous training, and thus never amount to much. The most capable tend to want to become High Priests of their hermetic religion of error and mediocrity, and spend their days stamping out heretics to their received dogma — in other words, younger economists asking hard questions. But, there are a few exceptions. We looked at one such exceptional economist last year, Stephen Kates, and his book Classical Economic Theory and the Modern Economy (2020). July 9, 2023: Classical Economic Theory and the Modern Economy (2020), by Steven KatesSeptember 3, 2023: Classical Economic Theory and the Modern Economy (2020) #2: Mostly Right As Kates put it: Writing this book was an odd experience, since the premise of everything found within the rest of this book is that just about the whole of modern economic theory is perniciously wrong, that other than here and there, such as in its opposition to rent controls, there is virtually nothing useful one can learn