In January I wrote a piece for the Atlantic, paper version, arguing that people were paying insufficient attention to the federal deficit. Unfortunately, given the realities of dead-tree publishing, the piece did not come out until April, by which time everyone was talking about the deficit, or so it seemed. But they weren't talking very productively.

My piece started by noting that a lot of people were suddenly buying gold, an investment that has only one advantage: protection against the erosion of the value of paper money. My contention was that there are only three ways to reduce the growing national debt: cut spending, raise taxes, or inflate it away. And in an age when Democrats are promising not to raise most people's taxes (as President Obama promised in the 2008 campaign) and Republicans are promising not to touch Medicare, the first two are politically impossible. Therefore, we are headed for a vicious bout of inflation and gold--a costly, non-productive investment in every other way--is the best protection against that. (In the article, I referred to "hyperinflation," which I'm told is a completely different phenomenon. Who knew? So now I use the non-technical term "vicious" inflation, meaning 10 percent or 20 percent, or enough to cut your savings in half every few years. Of course there are no examples in history, that I know of, of stable 20 percent inflation. Either you cure it or it turns into hyp...excuse me, even worse inflation.)

Of course there's a fourth possibility, which is just living with the debt. Most of the people who ridiculed my worries seemed to have that one in mind. But the world and economic reality will not let us do that. After all if they would, we wouldn't need taxes at all. We could borrow the entire cost of running the federal government and--what the heck--add a few extras. So at some point, the borrowing has to stop. If you'd asked a few years ago, even most liberal economists would have agreed that a one-year deficit of a trillion dollars (somewhat less than our deficit will be this year) must be very close to that point.

All of which is to say that yesterday's New York Times carried a page-one article, "Financial Uncertainty Restores Glitter to Old Refuge, Gold," which goes through roughly the same reasoning that I did, and notes that folks from Glenn Beck to George Soros are getting into gold. (I don't care why Glenn Beck is doing it, but I would have liked a bit more about Soros's thinking.) None of this proves that I'm right, of course--and I deeply hope that I'm wrong. But I think it shows that I'm not obviously wrong, as suggested by Paul Krugman, Brad DeLong and other liberal economists I usually agree with.

And if you're wondering whether I'm acting on my own advice, the answer is no. As I explained in the original article, I lack the courage of my convictions. Do as I say, not as I do.

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