Friday, November 12, 2010

Ooh, Shiny!

I can barely believe this...
Robert Zoellick, the head of the World Bank, kicked it off on Monday. In an op-ed in the FT he called for changes to the the global currency system. Among other things, he wrote:
"The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values. Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today."
I tend to agree with Brad DeLong's assessment of Zoellick's claim that markets are already using gold as a an alternative form of money:

They do not. They simply do not. That is not true. Markets are using gold as a speculative asset and a hedge. They are not using it is a medium of exchange, a unit of account, or a safe store of nominal value.
He really may be the Stupidest Man Alive.
Harsh, but accurate. I do find it shocking that the head of the World Bank is this confused about the difference between shiny things and money. When Ron Paul or Glenn Beck makes this mistake, I can chalk it up to ignorance. This is harder to fathom.

If we are going to go back to linking money to some other commodity, I think we should at least pick something more interesting than gold. My personal choice would be bubblegum. I like the idea of money as something you chew up and spit out. I'm also pretty sure the price of bubblegum has been less volatile than that of gold in recent years.

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