World Bank Chairman Proposing The Gold Standard?
November 9, 2010 · Posted in Monetary Economics
World Bank Calling for a Gold Standard?? OMG!!
OK, here is what he said:
The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values,[...]
A genuine gold standard at the very least means that every dollar you own can be exchanged at any bank against a fixed amount of gold.
So no, what the chairman suggested is not even remotely a gold standard.
The level of misunderstanding and lack of curiosity in the news media about the philosophical and effectual arguments behind the gold standard are, as always, absolutely fascinating.
Economic La La Land
Just for entertainment value, have a look at this piece by Berkeley’s Brad De Long.
It is a reasonable and empirically completely verifiable proposition that gold is treated by investors around the globe as a money substitute and that its moves over the past decades perfectly explain this hypothesis, with lots and lots of intelligent and successful blogging and investment literature to back it up. DeLong’s well thought out response to this notion:
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.
“They simply do not! No, no no!!!” because … Brad DeLong says so, that’s right! Wow … just WOW!!!
The certainty with which such completely clue- and careless academic ass-clowns unleash their obligatory shit-storm of bigoted, boring, and mindless tirades about the dangers of gold, sound money & deflation is, as always, absolutely unsurprising.
When you have no concept for the value of freedom and its true historical context and benefits, of course it’s not going to make any sense to you that people invest in gold, of course you are going to use every opportunity to talk it down with anger and irritation.
Voluntaryism and Money
A voluntaryist’s view on money is, as always, pretty darn simple: Don’t initiate aggression against peaceful individuals. It so happens that gold emerged as the best money in a competitive, free, and global money market, as I explained the history of money before:
With division of labor spreading, different goods would be used as money, such as tea, coffee, beans, salt, or cattle. There are numerous accounts of the usage of these goods as money in history. However, there are goods that are better and goods that are worse than others for usage as a medium of exchange. A medium of exchange needs to fulfill criteria such as durability, divisibility, homogeneity, measurability, sufficient but limited availability and broad acceptance. The metals gold and silver emerged as goods that best fulfilled these criteria when used on the market.
Are we asking that people be forced to use gold as currency? No! We are asking that people be allowed to choose, of their own accord, unbridled by threats of aggression, how to best produce and sell media of exchange on the market as demanded by consumers.
We reject capital gains taxes on popular currency commodities such as gold, we reject legal tender laws, a counterfeiting monopoly, and the entire massive and aggressive superstructure that enforces this currency regime, namely the government.
The Reuters article above is just another display of severely sociopathic mental retardation played out on a global stage by bureaucrats and politicians who simply won’t fathom the idea that maybe they should just get their sleazy fingers out of the money business and let people live their own lives. Hah! Unthinkable!!