Friday, 27 March 2009
Paul Krugman this afternoon is, intentionally or not, "waiting for a delayed plan at O'Hare". Perhaps his flight is on Geithn Air? (sorry)
While waiting, he discusses Eichengreen and Temin's paper about the "gold mentality". I strongly agree that the gold standard, equated by some "not just with prosperity, but with morality, decency, civilization itself" is a dangerous thing; and it's a symptom of a wider illusion.
Those who fetishize the manufacturing sector and say a service-based economy is "hollowed-out"; those who say gold is the only real currency and fiat money is a fraud; those who think everything needs to be manufactured within the borders of their own country (but presumably don't take that to its logical conclusion, by operating a car factory, iron mine and arable farm inside their own house) - these people are suffering from a delusion about what reality consists of.
If they think that only physical objects are real and that perceptions, promises, knowledge, processes, contracts, laws, assumptions, relationships, language and human contact do not matter, they are really missing out on a lot. What a barren life it would be if only the material world mattered.