Subject: In Which Bob Zoellick Makes His Play for the Stupidest Man Alive Crown - DeLong Blog
From: "Michael Andrews" <[email-masked]>
To: "Devon Archer" <[email-masked]>, "Hunter Biden" <[email-masked]>, "Eric Schwerin" <[email-masked]>, "Curtis Hastings" <[email-masked]>, "Neil Callahan" <[email-masked]>, "Thad Brown" <[email-masked]>, "Ronnie Mainieri" <[email-masked]>
Date: Tue, 9 Nov 2010 10:19:54 -0500

In Which Bob Zoellick Makes His Play for the Stupidest Man Alive Crown

The last thing that the world economy needs right now is another  
source of deflation in a financial crisis. And attaching the world  
economy's price level to an anchor that central banks cannot augment  
at need is another source of deflation--we learned that in the fifteen  
years after World War I.

Which is why Bob Zoellick says that we need it.

Alan Beattie watches the intellectual train wreck:

Zoellick seeks gold standard debate: Leading economies should consider  
readopting a modified global gold standard to guide currency  
movements, argues the president of the World Bank. Writing in the  
Financial Times, Robert Zoellick, the bank’s president since 2007,  
says a successor is needed to what he calls the “Bretton Woods II”  
system of floating currencies that has held since the Bretton Woods  
fixed exchange rate regime broke down in 1971. Mr Zoellick, a former  
US Treasury official, calls for a system that:

is likely to need to involve the dollar, the euro, the yen, the pound  
and a renminbi that moves towards internationalisation and then an  
open capital account.... 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.”

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.

Alan Beattie politely says:

Although there are occasional calls for a return to using gold as an  
anchor for currency values, most policymakers and economists regard  
the idea as liable to lead to overly tight monetary policy with growth  
and unemployment taking the brunt of economic shocks...