“ People seem to have forgotten how crazy 1998 and 1999 were. My recollection is that people at that time expected to work for two years and then retire! The market was unbalanced in favor of employees to a degree that was unhealthy, because businesses were constantly confronted with unpredictable escalations in salaries, unexpected losses of key staff, uncontrollably high turnover. There was so much chaos in the job market that businesses had difficulty finding time to actually focus on their business.

“ There are no causes of poverty. It is the rest state, that which happens when you don’t do anything. If you want to experience poverty, just do nothing and it will come. To ask what causes poverty is like asking what causes cold in the universe.

“ Look around the world, and extra money is piling up in all sorts of places. Japanese corporations are recording record profits, but not doing much spending. Chinese companies are on an investment tear, but the country is getting so much money from exports that it has billions to spare.

Access to global savings has enabled the U.S. private and public sectors to fund a big increase in housing construction, health-care spending, and military outlays—all without boosting inflation or pushing up interest rates.

But the global economy is having a tough time absorbing the unanticipated flood of funds. Instead of going into productive investments, cheap money may be overheating spending and sending asset prices soaring too high, setting the stage for a future bust.

The savings surge also means that governments are not being penalized for running budget deficits. Cheap capital will give politicians the opportunity to waste the money on items that don’t boost long-term growth.

If low rates eventually pave the way for productive investment by governments and businesses, that would benefit investors. But until this happens, they must choose between accepting lower returns or taking on added risk.

“ Bubbles have two components: a trend that prevails in reality and a misconception relating to that trend. In real estate, the trend consists of an increased willingness to lend and a rise in prices. The misconception is that the value of the real estate is independent of the willingness to lend. That misconception encourages bankers to become more lax in their lending practices as prices rise and defaults on mortgage payments diminish. That is how real estate bubbles are born.

Markets that are prone to bubbles should be regulated. It is impossible to prevent bubbles from forming, but it should be possible to keep them within tolerable bounds. Regulators such as the Fed, the Treasury, and the SEC must accept responsibility for preventing bubbles from growing too big. So far they have explicitly rejected that responsibility.

“ In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process, and as a protector of property rights.