After reading this I suggest that the reader then access the last section of Chapter 10 in Keynes' General Theory and read it all.
I have it as a computer file just to remind me of the author's good sense. Two paragraphs read;

"Pyramid-building, earthquakes, even wars may serve to increase wealth, if the education of our statesmen on the principles of the classical economics stands in the way of anything better.
It is curious how common sense, wriggling for an escape from absurd conclusions, has been apt to reach a preference for wholly 'wasteful' forms of loan ex¬penditure rather than for partly wasteful forms, which, because they are not wholly wasteful, tend to be judged on strict 'business' principles. For example, un¬employment relief financed by loans is more readily accepted than the financing of improvements at a charge below the current rate of interest; whilst the form of digging holes in the ground known as gold-mining, which not only adds nothing whatever to the real wealth of the world but involves the disutility of labor, is the most acceptable of all solutions.

If the Treasury were to fill old bottles with bank¬notes, bury them at suitable depths in disused coal¬mines which are then filled up to the surface with town rubbish, and leave it to private enterprise on well-tried principles of laissez-faire to dig the notes up again (the right to do so being obtained, of course, by tendering for leases of the note-bearing territory), there need be no more unemployment and, with the help of the re¬percussions, the real income of the community, and its capital wealth also, would probably become a good deal greater than it actually is. It would, indeed, be more sensible to build houses and the like; but if there are political and practical difficulties in the way of this, the above would be better than nothing".

A nicely balanced article.

The holes in the Austrian School position are neatly examined, but so is the reality of the people's irrational faith in gold as a store of currency. Underneath, it is just another metal that is dug out of the ground, more "useful" than some, but less than others. If anyone were to propose that yttrium should form the basis of a universal value exchange, they'd be laughed out of court, but there is no fundamental difference: it is only the history of gold that gives it some kind of extra cachet.

Gold has much in common with religion. It is only the continuing adoration of the faithful that keeps it in the public eye, but the protestations of the faithful are forever with us.

I don't disagree with the article but a point overlooked in the paper it cites is the rise and rise of ETFs. Part of reason for the surge in gold prices in the past few years is due to the invention of gold ETFs. Investors, both professional and private, are now able to trade in gold through those exchange traded funds, and that has created very considerable demand for the stuff.

There are other reasons, of course, including major economic uncertainty, making gold look better as a safe haven. But the ETFs reversed a previous trnd evident through to the 90s of gold losing its investment appeal, and even its relevence. Central banks were selling their reserves.

The present international monetary system could certainly be improved, but there is no possibility of a return to the gold standard.

A few points; the GFC was created in essence by the debt funded creation of wealth not connected to any productive effort, enterprise or outcome.
With the benefit of hindsight, were I to be offered A trillion dollars worth of derivatives' or 50 billion dollars worth of gold just prior to the GFC; I would have chosen the gold!
I follow a rule that says, if you don't understand it don't invest in it. Followed by the other common sense mantra, sell on the rise and buy on the fall.
Subsequently, as others were losing their shirts, my wealth would have increased or remained relatively stable. Nonetheless, I subscribe to Keynesian economics, which allows govts to pump prime an economy during a severe downturn and gradually withdraw as the private market and activity picks up.
Both the Great depression and the more recent GFC, were both preceded by more and more of our finite wealth concentrating in fewer and fewer hands.
I see another Great depression emerging in Europe by as soon as or before 2016?
Just as in the Great depression, Conservative govts have applied Austerity measures, to arguably preserve the wealth and privileges of the already privileged. Just as before history is being repeated and a relatively manageable recession is being compounded and contracted by this insane ideological imperative, which is actually creating even more contraction, [the law of cause and effect,] which already has the seeds of yet another great depression in it.
We need to return to a gold standard other more logical economic practise. I believe in social credit, raised internally, via self terminating 30 year bonds and used exclusively to fund and build income earning assets; like say high rise low rent towers or very rapid rail projects etc, which then gradually repay/replace the borrowed funds.
One doesn't need to limit the credit or impose any interest payments; but, can only proceed, within the natural limitations imposed by the available locally trained/educated skill base and building materials. Bricks, mortar steel and glass etc.
Rhrosty.

Let me clear up a few points before other posters go ballistic. One doesn't need to charge oneself interest, on funds forwarded by the federal reserve; but would have to (re)pay some interest and capital, which is included and gradually drawn down over the full thirty year term.
This could be around 3% as capital and 3.5% as interest, 50% of which could be tax free, and an ideal place for self funded retirees to place their retirement nest egg; given, the return would be guaranteed over the life of the bond, regardless of economic downturns, booms or busts.
Sure we need foreign investment; and long term govt guaranteed bonds would achieve that; sans the debt laden foreign carpet bagging investor and purloined profits? Rhrosty.

Rhrosty

I know I'm going to regret asking this, but I'm curious. This sentance

"Just as in the Great depression, Conservative govts have applied Austerity measures, to arguably preserve the wealth and privileges of the already privileged."

How does that work exactly? I was under the impression that no-one, rich or poor, wanted austerity measures and I don't see how it would preserve anyone's position. So what's your justification?

I have always liked gold but alas never actually had much of it. However one time at a gold shop I got the chance to hold a one-kilogram block of gold in my hand - about the size of a standard size block of Cadbuyr's chocolate - but much better looking! I gazed at this object, and the light and colour of it really were quite beautiful. I gazed at it some more, and gazed some more, and it seemed to be entrancing me. I looked up at the sights around me, and back down at the gold, and I really felt I could just go on gazing at it! Even if it had no other attraction than its simple and powerful beauty it's easy to see why people want gold.

However just because it's true that value is subjective, and just because there is no such thing as "intrinsic objective value", doesn't mean gold doesn't have objective value, meaning an objective *price*. Obviously it has objective value in that sense - its market price arises from the fact that so many people want it.

Michael's critique of Austrian theory is incomplete because he doesn't seem to understand what they are saying, and has not refuted Austrian theory. Just because there is objective intrinsic value, does not mean that one thing is just as good as another when it comes to money, nor that gold is just as good as government's paper rubbish, nor government can increase the supply of money substitutes without causing bubbles and depressions.

There is no need for Michael, or Keynes, to decide on behalf other people, what they should value. They are quite capable of doing it all by themselves.

The very fact that fiat currency is and can only be maintained by criminalising society's first preference for money just says it all, doesn't it? Perhaps Michael and Keynes are cleverer than everyone else in the world put together - and just perhaps they are not.

Michael, if you read "What Has Government Done to Our Money?" and "The Mystery of Banking", both by Murray Rothbard (free online I think) you will see that government manipulating the money supply by increasing money substitutes relative to money in specie, has historically been behind the bubbles which you wrongly attribute to capitalism without giving any reason for your belief. You need to refute that argument before you can just baldly assert without justification, as you have done, that such bubbles are intrinsic to "capitalism", rather than government inflating the supply of money substitutes. Thus your entire argument against the Austrian school collapses.

"Gold can offer a safe haven in difficult times like this, but is surely no panacea for regulating economies."

Here we see why Michael's argument has miscarried: he thinks the purpose of money is for "regulating economies" - by governments with their hand in the till and a direct conflict of interest with the rest of the population.