World Bank president Robert ZoellickLehtikuva/Reuters
Sometimes, being called the world's dumbest economist doesn't do justice to the wackiness of the views expressed by the myriad contenders for that title. Take Robert Zoellick, president of the World Bank. Or better yet, don't.
Mr. Zoellick waded into the global debate about whether or how to replace the U.S. dollar as the world's reserve currency. His thinking, presented in a commentary in the Financial Times, seemed reasonable enough. Until he started blathering about restoring a modified version of the gold standard, which was abandoned in 1971, as part of a new international currency arrangement overseen by the G20.
"This new system is likely to need to involve the [U.S.]dollar, the euro, the yen, the pound and a renminbi [yuan]that moves towards internationalization," Mr. Zoellick declared. "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."
Gold hit a record high in the wake of Mr. Zoellick's comments, and gold bugs everywhere must have been beside themselves with joy.
But really Mr. Zoellick, who the heck uses gold today as "an alternative monetary asset" and why would you rely on a speculative investment typically used as a hedge or insurance against disaster as an indicator of future currency values.
Esteemed UC Berkeley economics prof. Brad DeLong said it would be ridiculous to link currencies to an asset beyond the control of central banks. Mr. Zoellick, he declared, "really may be the stupidest man alive."
Further proof, as if any were needed, that the best economists can go toe to toe with the political masters of hyperbole any day.