Monday, November 8, 2010

The Cheese Standard

Problem 1: The World Bank head promotes an international currency system based on gold.

Problem 2: The USDA promotes overconsumption of cheese, in tension with its anti-obesity drive.

Both of these are bad ideas from authorities who should know better. But with minor modifications, we can unite both of these foolish proposals into a superior one. Namely: a new international monetary order based around the Cheese Standard.

In an economic environment characterized by high unemployment and low to negative inflation, gold is inferior to cheese as a medium of exchange. Since cheese can't be stored indefinitely, it must be spent quickly, stimulating the economy and boosting employment. Gold has exactly the opposite properties. And as a medium of exchange whose supply is relatively fixed and beyond any government's immediate control, gold leaves expansionary monetary policy unable to help anyone.

And that's how I answer Robert Zoellick's demands for a Gold Standard. He may press upon the brow of labor a crown of cheese. But he shall not crucify mankind upon a cross of gold.
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