Rare Earths, Common Corruption

An earlier note discussed the question about the possible impending scarcity of rare earth minerals.

Shortly thereafter, the esteemed representative, Jerry Lewis (I prefer the other comedian) put a $3 million earmark for an already profitable US mining company in the House Defense Bill.  Should one be surprised that, along with two private equity funds, Goldman Sachs is the owner?

Allen, Jonathan. 2009. “Critics Blast $3m Mining Handout.” Politico (6 October).


4 comments so far

  1. Thomas Molitor on

    Speaking of rare earth minerals or metals, I have a question for you and hopefully it’s not inappropriate to break into this particular post to ask you. If it is I apologize. But I am doing some historical research on the relationship between the Gold Standard and funding wars. Didn’t WW II bankrupt Britian’s gold reserves which led to the Bretton Woods Agreement (part of the reason). I hear a lot today about “ending the Fed Reserve Bank” and going back to the Gold Standard. Isn’t it impossible to return to a 100% reserve gold standard, or Gold Specie Standard, simply because the quantity of gold in the world is too small to sustain current worldwide economic activity at current gold prices?

    • mperelman on

      The gold standard creates a rigidity, which prevents the economic system from responding to crises, especially deflationary crisis. During the Great Depression, the countries that got off the gold standard the quickest were also the first to recover.

  2. Thomas Molitor on

    By “rigidity” – in the context of my discussion of gold and war – do you mean to say that a gold standard makes it more difficult to fund wars; hence, the move to fiat currency makes it easier to fund (print) war?

    • mperelman on

      Yes, the gold standard might make it harder to engage in wars, but countries still found it easy to do under the gold standard.

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