Harold James: Why There's Gold Fever
[Harold James is Professor of History and International Affairs at Princeton University and Marie Curie Professor of History at the European University Institute, Florence. His most recent book is The Creation and Destruction of Value: The Globalisation Cycle.]
There is at present a profound uncertainty about currencies. That is why the president of the World Bank, Robert Zoellick, created such a stir with a brief reference to an enhanced role for gold in the course of a plea for a more sustainable international exchange rate system.
The revival of interest in a golden measure of value derives from two fundamental sources. First, there is a question about our personal sense of worth. The aftermath of the economic crisis has destroyed our confidence in the reliability of conventional paper money.
We need money as a store of value, but in the course of the crisis it has also become a tool of government policy. Looser monetary policy or "quantitative easing" can help to get the economy moving again. But the purposes of money may conflict and collide. When money becomes too much of a policy tool, the function of reliably measuring value gets chipped away....
Read entire article at CNN International
There is at present a profound uncertainty about currencies. That is why the president of the World Bank, Robert Zoellick, created such a stir with a brief reference to an enhanced role for gold in the course of a plea for a more sustainable international exchange rate system.
The revival of interest in a golden measure of value derives from two fundamental sources. First, there is a question about our personal sense of worth. The aftermath of the economic crisis has destroyed our confidence in the reliability of conventional paper money.
We need money as a store of value, but in the course of the crisis it has also become a tool of government policy. Looser monetary policy or "quantitative easing" can help to get the economy moving again. But the purposes of money may conflict and collide. When money becomes too much of a policy tool, the function of reliably measuring value gets chipped away....