Tuesday, November 22, 2011

Nouriel Roubini vs. James Rickards over The Gold Standard via Twitter

Yesterday, economics Professor Nouriel Roubini decided asked via twitter James Rickards, author of "Currency Wars," why he advocates for a return to the gold standard in his book "currency wars," when it was this return to gold that was a direct cause of the Great Depression. Nouriel Roubini and James Rickards engaged in a 16 hours long twitter debate over the Gold Standard . Nouriel Roubini wrote via twitter : "For study of Great Depression & Gold Standard cause of it read Temin's Lessons From The Great Depression rather than Rickards' Currency Wars"

"Goldbugism is a cult similar to worship of the Biblical Golden Calf. If we kept believin such voodoo we wold still be stranded in the desert" he added "Problem of Gold Stn: wage cuts much harder than FX deval.Politically unacceptable" Roubini explains "Goldbugism is theology not economics.There is literally no piece of evidence that would cause them to change their minds"


Unknown said...

Roubini's bankrupt ideology (and COMPANY) would have benefited from a little gold "worship".

but hey, talk about stupidity....you'd rather worship an idol made of worthless fiat paper.

dots_thots said...

Roubini completely ignores the criterion of going back to gold at the right price. Even after having it explained to him he still didn't get it!

The two greatest reasons for gold to be money is the stock to flow ratio caused by its use as money and little else, and the fact that no-one can be trusted to manage a currency.

Evoking images of cults and barbarous relics was ludicrous - since currency can and is as arbitrary as pieces of paper it doesn't really matter what you use as long as it imposes discipline. Gold provides that as a minimum and it has other benefits also.

Roubini accused Rickards of ignoring prominent economists throughout history whilst, at the same time, he ignores the fact that history clearly shows the greatest stability during times of true gold standards (not the exchange standards Roubini and others frequently mix up). For economies to function they require a numéraire - a stable measure for economic calculation. Without that the whole system is based on guess work, aiding the least responsible and subsidising the worst behaviour. It requires an expensive degree to be convinced otherwise.

In a 100 years time, people will surely look back at the 20th century and gasp in amazement that people could be sucked in by "paper mania" when they read about it alongside "tulip mania". But, alas, each generation learns the hard way.

Roubini needs to read Rothbard and actually, Rickards' book also since he clearly hasn't bothered.

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