Goethe, courtesy of Wikipedia
Originally posted on Tuesday, April 1st, 2014
Herr Jens Weidmann, president of the German central bank, gave an erudite and subtle speech on September 18, 2012 citing Goethe’s Faust, Part II. Faust II is a long, learned, parable of the disorders created by moving from gold-defined to paper money.
Her Weidmann’s 2012 speech was commented upon by this blogger in a column in Forbes.com. Weidmann:
“Concrete objects have served as money for most of human history; we may therefore speak of commodity money. A great deal of trust was placed in particular in precious and rare metals – gold first and foremost – due to their assumed intrinsic value. In its function as a medium of exchange, medium of payment and store of value, gold is thus, in a sense, a timeless classic.”
As previously noted here, “In his Speech in the Committee for Action and Economic Expansion, March 27, 1952, Jacques Rueff, the great monetary statesman, anticipated the recent speech by Bundesbank president Jens Weidmann by 60 years. … “[I]t was Germany which gave the world its greatest money theorist—Goethe. He was, to be sure, no economist, yet it was he who in Faust (Part II) clearly demonstrated that inflation was and could only be an invention of the devil.”
This blogger also had reflected, on September 9, 2012, upon the monetary genius of Goethe as demonstrated in Faust II, in a column entitled, Money, Twisted; Caught in the Devil’s Bargain, in The American Thinker.
The perversity? Monetary shenanigans represent a short-term fix but the long-term cause of economic, social, and political woe. Thus do Neo-Keynesian economists such as Krugman enlist in the Devil’s Party. “Easy money” advocates propound QEs and Twists and other weird devices to generate a brief relief for the economy. They ignore the seeds of destruction thereby sown.
The story of Faust is a secular, not a religious story. It is a play, not Scripture. Barack Obama is a secular Protestant, not a Satanist. But Goethe, notwithstanding his invocation of sacred symbols, wasn’t propounding theology. He was an empiricist. Weatherford: “As a scientist and statesman as well as a poet and playwright, [Goethe] foresaw the great accomplishments and the shortcomings of the emerging industrial world that would be financed on the newly emerging monetary system of paper money.”
Herr Weidmann now has returned, briefly, to referencing Faust again.
As reported by the London FT, responding to recent questions about relocating Germany’s international gold holdings to Frankfurt the Bundesbank president again quoted Goethe’s Faust: “The lure of gold has power over all.”
Compliments to a leading central banker for excellent public servant graced with erudition. May Herr Weidmann find, and enjoy, the works of Prof. Rueff.
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