He notes, for one thing, that any arbitrary anchoring of global currencies would be deflationary — exactly what DeLong sees as the problem right now.
And he takes umbrage with Zoellick’s characterization of gold as a new form of money:
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.
Zoellick’s characterization of gold is trendy, but there’s something to DeLong’s argument here. Yes, the value of gold has surged, but use of gold as an actual medium of exchange appears to be non-existent, and while much of the surge can be traced to loose money, there’s also just the fact that gold is a small market, and the existence of vehicle lik the GLD has made it easy for speculators to place a bet or a hedge.
We wouldn’t be surprised to see Krugman weigh in soon, although… he probably can’t top DeLong in terms of rhetoric here.
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