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Tuesday, November 9, 2010

Robert Zoellick is an Idiot


Basically, Robert Zoellick, head of the World Bank, is saying that we should entertain the return of gold-backed currency largely because markets, at the moment, are treating gold as an alternative to paper currency. Somehow, he believes, currencies backed by gold would provide more stable economies. Never mind that while global economies were on the gold standard in the 19th and early 20th centuries we had routine severe financial crises about every seven years and a very nasty tendency toward deflation.

James Hamilton over at Econbrowser has a fairly succinct post on this matter about how the gold standard actually contributed to the Great Depression (and probably made previous depressions worse as well). http://www.econbrowser.com/archives/2005/12/the_gold_standa.html

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