This is old, from 2011, but I just now stumbled across it while looking up other stuff. It’s Krugman, blaming an increase in the price of gold on….Glenn Beck.
Don’t take my word for it; read it yourself. Krugman quotes Kash Mansori explaining that because the gold market is fairly small it would only take a sustained effort by a small proportion of investors to drive up the price.
Imagine that an effective, sustained advertising campaign, targeted at wealthy, conservative individuals in the US, is able to persuade 25,000 of them per month to switch a portion of their financial assets into gold. (Note that the target audience would be those roughly 3 million US households that have over $1 million in financial assets.) Suppose for the sake of argument that each of them is persuaded to shift just 5%, or $50,000, of their portfolio into gold. Such an advertising campaign would have the effect of pushing $15 bn per year into the market for investment gold — very possibly enough to have a significant impact on the price of gold, given how small the overall market for gold is.
Interesting, and plausible if he’s right about the size of the gold market. Some of Krugman’s less-than-impressed commenters argue he’s badly underestimated the world gold market, but I don’t know and it doesn’t matter for evaluating Krugman’s response.
Glenn Beck was financially intertwined with Goldline, and therefore had a financial stake in pushing fears of hyperinflation. And he had many, many viewers. So there was a direct channel through which conservative Americans were being pushed into buying gold.
Sooooo…Krugman thinks American millionaires take their investment advice from Glenn Beck? One wonders how they became millionaires, or how long they’ll remain millionaires. As it turns out, the intertoobz is all full of actual data, the kind of thing Krugman’s good at using when he feels like it, and even a two-bit academic like me can find Beck’s audience demographics. According to the data there on the date I’m writing this, Glennbeck.com got 2.5 million unique visits over the past month. 78% of his viewers make $100,000/year or less, and while income isn’t wealth, most people with that income aren’t millionaires.
Let’s be generous, though, and assume that the remainder of his audience are in fact all millionaires, including the 14% making between $100k and $150k/year. That’s 22% of 2.5 million, or 550,000 people. Now let’s take Kash’s proportion (25,000 of 3,000,000 people) and apply it to Beck’s 550,000 probably-not-really-millionaires, which give us just under 4600 people. Again, I’m the generous type, so let’s round that up to 5,000. Now, $15,000,000,000 / 5,000 = $3,000,000. So we’re not just talking about millionaires being influenced by Glenn Beck, not just folks willing to shift 5% of their million dollar portfolios into gold, but people able to shift multiple millions into gold.
Sure, we can assume that the numbers are higher, that the proportion of Beck’s listeners who follow his investment advice is much higher than the assumptions Kash used in his wholly Beck-free hypothesis. But that still requires us to assume that wealthy people are taking their investing advice from a college dropout.* I’m unwilling to make that assumption. Really, my whole analysis is entirely speculative, spurious even, but it’s incomparably beyond what Krugman attempted, which is no analysis at all.
So is this what happens to smart people when they’re forced to write to deadlines and they just happened to have a very busy week? Or is this what happens to smart people when they put on their ideological blinders? Such a claim really should be so embarrassing that Krugman’s still involuntarily curling up in the fetal position every time he remembers it.
* There’s nothing really wrong with being a college dropout. I was a college dropout for a while, in fact. But it’s not as though Beck dropped out of college and made a fortune as an investor, eh?