However multiplex the real world may be, the world’s economic system ought to be only an aggregation of simple transactions when we exchange money for goods or services. At bottom, nothing ought to be simpler. Instead it has become a vast web of intrigue and deception, unknowable even to those who are supposed to be experts.
The first ‘working’ day of the week yesterday became yet another day of panic and turbulence on the stock markets with bank shares showing the greatest weakness. Whereas the stock of status goods in the advanced countries are as complete as they need ever be for persons have the time and energy to enjoy them and, at the same time, show their social rank in life, the future is becoming increasingly apprehensive for many.
For increasing numbers of young adults in the advanced countries the prospect of ever owning or comfortably renting a house and thus being able to raise a family is receding year by year. For increasing numbers of middle aged persons, worries are growing whether their pensions — private or state — are going to be adequate in 10 or 20 years’ time and whether they’re going to get the heath care they know is theoretically available, but is increasingly gruesome already for many in retirement homes, are becoming stark and, frankly, scary.
It ought not to be like this. Yes, the present situation is unknowable even to the experts. But it’s to be remembered that experts are human, and all humans can be bowled along by peer pressure once a fashion starts — particularly if it starts at the top of the pecking order.
And the peer pressure that permeates the minds of most economists today — mainly because most economists text books have been Paul Samuelson’s and Keynesianism still reigns — is that gold standard currencies are not the answer to the present total monetary mess.
There was nothing wrong with going back onto the gold standard in 1925 following the First World War — apart from not being done in 1919. What was wrong was going back at the rate of £4 to the world value of one ounce of gold. This was the pre-war value to suit the feelings of the City of London and the Bank of England. It should have been done at something like £10-£12, the pound having been devalued more than two fold during the war by money printing If a sensible rate of exchange had been arrived at then, the great exporting industries of England — textiles, coal, ships, heavy engineering — could have resumed at something like their pre-war quantities and a million and a half need not have been thrown out of work. As it was, they were pole-axed and our own version of the Great Depression ensued.