People Cannot Imagine the Destruction Coming

FT Alphaville: Gold fetishism has had its day

Harold James is professor of European Studies at Princeton. Brendan Greeley is a PhD student there and a former FT Alphaville writer.

I normally don't include bios, but we need to start thinking tribally. What is your money?

Gold has long been fetishised in Russia and elsewhere. But the fetish of gold — Keynes’ “barbarous relic” — is the last gasp of a view that money has an intrinsic value in itself, constituted just by the fact of its existence.

Without getting into the weeds of subjective value, gold does have a value for wealth display (jewelry).

People often mistakenly see money as an asset — that’s the old fetishism. But money represents a value, one that needs to be earned. What ultimately makes a currency secure is credibility: the confidence of others. That will depend on whether a government observes laws and conventions. Money isn’t a shared illusion. It is rather a series of agreements and customs among and within countries. Violating some of those agreements can shatter the rest, destroying the privilege of money. A massive violation of norms can produce a massive loss of value. And a fortress of reserves offers no protection.

USG is a serial violator of norms, laws, conventions and agreements. Whereas gold needs no credibility because it is a thing unto itself. It requires no laws, conventions or agreements.

Gold probably won't be a saviour of the world economy, but it is the likely default that will emerge from the ashes of the modern world along with various cryptocurrencies.