Recently Indian finance minister Pranab Mukherjee, during Zee television award function, said that there is a "need to dissuade people from investing in gold " (see here). Finance minister is obviously lying to his teeth. He is clearly trying to misguide the innocent public for his own political benefits. Inept finance minister is ignorant of basic monetary theory, just like other gold disparaging mainstream economists like the chairman of US federal reserve, Ben Bernanke. In his interview he revealed his total cluelessness regarding the true nature of money and many other things related with economics. Below I present his statements with my critique in italics.
He said, "there is a need to spread financial literacy to encourage people to invest in market instruments"
People are already literate about their finances in this part of the world Mr. FM and that is the reason why they are buying Gold and Silver to protect their wealth against raging inflation which you only have created. You stop preaching about the matters which you truly don't understand. You want to encourage people to invest in market so that they loose everything in those phony paper promises? You should go and check Gold's record for last 5000 years before making such nonsense statements; And, if you can't check 5000 years history, then at least check last 11 years history of Gold v.s. market paper promise investment options. They all are in gutter right now compared to Gold. By encouraging people to invest in phony paper market instruments you are encouraging them to commit financial suicide! Mr. Mukherjee, who is advising people to commit suicide, is basically in need of financial literacy!
Then he said, "the Minister regretted that people are investing in gold with the expectation that the value of their investment would appreciate"
Mr. Finance Minister you should stop regretting about what others are doing. People know what is good for them and what is bad. You don't need to tell them what is good and what is bad for them. People don't invest in gold primarily with an expectation of value appreciation. They buy Gold as their cash-balance because Gold is market chosen money since last 5000 years. People know that only in Gold the purchasing power of their hard earned wealth will remain safe and so they buy it. Gold's value does appreciate when government is debasing currency rapidly but that is an added advantage of having Gold in your portfolio.
He also said, "Quantum of import of gold ... is a clear indication (that) large section of community...want (to) investment in dead asset only with expectation that value would appreciate".
Mr. FM, gold is not a dead asset. Gold is MONEY. And money can never be dead. Gold gives you protection against highly uncertain future and that's its productivity. I advise Mr. FM you read William Hutt and Hans Hermann Hoppe to understand the productive nature of money.
He said, "time is ripe to motivate our educated upper middle class to climb from saving mode to wealth generation mode."
Saving mode is wealth generation mode Mr. Mukherjee. There is a difference between saving and hoarding, which Mr. Mukherjee doesn't understand, just like his Keynesian economic advisers. And, Mr. Mukherjee, when you, your government and your central bank RBI is debasing the rupee at such a rapid speed - via inflation - then how can people think of generating any wealth!? Whatever wealth the productive class of this country is generating is being stolen from them by you and RBI via inflation. In this highly inflationary economy, the need right now for people is to protect their hard earned wealth and that's what they are doing by buying Gold and Silver. If you want people to generate wealth, then, first stop stealing their wealth!
Then he said, "...My request to financial analysts and other experts and leaders in this field is to ensure than we can create confidence in market, spread financial literacy and merit of investment could be widely spread".
Yeah your friends in the financial world are trying every bit hard to fool people by giving similar advise like you to them to invest in paper promises. Mr. Finance minister need to know that the problems which economy is facing is not a confidence problem. It is a problems of flawed State interventionist Keynesian policies. And, if people don't have confidence in the financial markets, then, it is because you are screwing those markets via myriad of government regulations. Remove all the regulations and free the markets and see how confidence returns.
He said, "The Minister added that the government is committed to make India an investment-friendly destination and financial power house of the world."
How? By retrospectively levying heavy taxes on foreign companies and by intervening more in the market?! As long as government is committed to anything, make sure that nothing good will happen. As long as government is meddling in the free market, nothing good can happen.
As you can see above, Mr. Mukherjee is basically blaming innocent public - who is trying to safe guard their hard earned wealth against the raging inflation, which is a creation of central bank RBI and finance minister Mukherjee and his government - for his and his government's own shenanigans. This is the usual tactic of knave politicians: first create the problems and then blame people for it. Finance minister should be ashamed of himself for destroying peoples' livelihood through inflation. Instead of misguiding the public, he should better put his own house in order first. He should mind his own business and leave people alone to make their own decisions.
My advise to public: Please don't listen to these politicians because they are fooling you all. Continue to buy Gold and Silver periodically using rupee cost averaging method. Governments around the world are going to print huge amounts of money which will destroy all the fiat paper currencies and all paper promise investments like stocks, bonds, mutual funds, bank accounts etc. At least maintain 15-20% of minimum allocation in Gold and Silver, if you want to survive the government central bank generated inflationary tsunami.