Paul Krugman: Goldbugs, Greece, and Affinity Fraud


 

Joe Weisenthal tries to understand why Barron’s, which he describes as a “quiet financial newspaper”, has a hysterical cover story about Obama turning America into Greece, Greece I tell you. So you might want to note that they’ve done this before. I don’t regularly read Barron’s or even notice what they’re saying, but I did note their frantic calls for a rise in interest rates back in October 2009, that’s right, 2009 — because inflation! confidence!

The truth is that Barron’s isn’t that different from the WSJ editorial page, which has also been warning about inflation and soaring interest rates for four years or more, and never seems daunted by being wrong again and again. Nor do readers seem to be put off.

Weisenthal basically puts it down to a marketing ploy; he notes that

there’s a very wide overlap between investment newsletter services, and cranky, anti-debt, armageddonism. It’s part of the pitch.

and he adds that

People always want to be told a story. And the doom story tends to have appeal among the older, conservative readers of these publications.

I’ve made much the same point, more offensively: I think of it as a form of affinity fraud, in which these publications (and various web sites too) reach out to readers by appealing to their shared hatred of snooty intellectuals who probably want to take all their money and give it to the 47 percent; since such people also tend to favor monetary and fiscal flexibility, there you have it.

The remarkable thing is that there seems to be no penalty at all for being wrong, consistently and repeatedly. Being their kind of guy is all that matters, even if it leads to terrible investment returns.

Goldbugs, Greece, and Affinity Fraud – NYTimes.com

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