Surprisingly (and, for what it’s worth), I don’t disagree with much in Paul Krugman’s latest New York Times op-ed on the politics of goldbugs, this coming on a day when precious metals markets are seeing some of their worst selling in years.

News flash: Recent declines in the price of gold, which is off about 17 percent from its peak, show that this price can go down as well as up. You may consider this an obvious point, but, as an article in The Times on Thursday reports, it has come as a rude shock to many small gold investors, who imagined that they were buying the safest of all assets.

And thereby hangs a tale. One of the central facts about modern America is that everything is political; on the right, in particular, people choose their views about everything, from environmental science to gun safety, to suit their political prejudices. And the remarkable recent rise of “goldbuggism,” in the teeth of all the evidence, shows that this politicization can influence investments as well as voting.

What do I mean by goldbuggism? Not the notion that buying gold sometimes makes sense. Gold has been a very good investment since the early 2000s, and it’s probably not all bubble.
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Conservative-minded people tend to support a gold standard — and to buy gold — because they’re very easily persuaded that “fiat money,” money created on a discretionary basis in an attempt to stabilize the economy, is really just part of the larger plot to take away their hard-earned wealth and give it to you-know-who.

But the runaway inflation that was supposed to follow reckless money-printing — inflation that the usual suspects have been declaring imminent for four years and more — keeps not happening. For a while, rising gold prices helped create some credibility for the goldbugs even as their predictions about everything else proved wrong, but now gold as an investment has turned sour, too. So will we be seeing prominent goldbugs change their views, or at least lose a lot of their followers?

I wouldn’t bet on it. In modern America, as I suggested at the beginning, everything is political; and goldbuggism, which fits so perfectly with common political prejudices, will probably continue to flourish no matter how wrong it proves.

I was with him up until that third-to-last paragraph.

Surely, there are a lot of people who fit the description above, but, more importantly, there are a lot of very wealthy people who have read enough history to understand that monetary systems come and go and the current is shakier than ever, now a half decade removed from the worst financial crisis since the Great Depression.

As for “runaway inflation”, my guess is that, given what central banks around the world are now doing, the “keeps not happening” characterization has an expiration date. When that expiration date is would be a nice thing to know.