The end of fiat currencies and return of the gold standard?

For years, gold bugs and other “crazies” have called for returning to the gold standard. “Smarter” people argued against using the “barbarous” metal as a standard, foretelling a return to the Dark Ages. Well, the “crazies” no longer look so crazy and the “smart” people no longer look so smart. Marketwatch reports:

The president of the World Bank said in a newspaper editorial Monday that the Group of 20 leading economies should consider adopting a global reserve currency based on gold as part of structural reforms to the world’s foreign-exchange regime.

“Although textbooks may view gold as the old money, markets are using gold as an alternative monetary asset today,” said Zoellick.

He said such a reform would reflect economic realities and should be considered as a successor to the existing global currency paradigm known as “Bretton Woods II.”

Zoellick said a return to some sort of currency link to gold would be “practical and feasible, not radical.”

To adjust Churchill’s famous quote for this situation: The gold standard is the worst system of currency, except for all those other systems that have been tried.

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