I ran across an excellent word in a Bloomberg article on Tea Partiers the other day: mumpsimus. It means an idea someone refuses to let go of even though it’s been disproven to him. It’s a lesser variant of idée fixe, a pathological obsession.
One can be obsessed by a true idea—like climate change. The key to a mumpsimus is falsity. It can be as innocuous as sticking with a mispronunciation, which was how the word originated (the correct word was sumpsimus, but the priest who uttered it refused to alter the way he said it, even after it was brought to his attention), to a belief that currency debasement caused the fall of the Roman Empire, which is a theme in the shrewd and insightful Bloomberg article.
The ancient Latin word mumpsimus said aloud sounds as creaky as the dogma of the gold standard. It’s almost onomatopoeic. You can hear the pot cracking.
The idea that gold will be a store of value when the climate unravels in earnest is positively medieval. Which, now that I say it, may not be that inaccurate, since that all-encompassing disaster will likely cast us into a new Dark Age.
But gold has only the value we agree to impute to it now and, more importantly, in the future. In other words, its value is as arbitrary as the Tea Partier-derided “fiat money” that we’ve been using since Nixon (wisely) took the U.S. off the gold standard. Up to that time, having the dollar fixed to gold caused or amplified pretty much every financial panic in U.S. history for the simple reason that gold is finite and the market can be cornered.
Money marks our view of the future. If you think gold will retain its ascribed value, irrespective of how that future unfolds, then you’ll be willing to extend credit, because you have faith that the value will be returned to you. The economy works because we believe our 401Ks will be there more or less at their current value or better when we retire. We believe that our country and its economic system will be the same then. Our savings are a direct expression of that faith in the future, gold standard or no.
It’s easy to see how the value of paper currency can be distorted. Weimar Germany had exponential daily inflation in 1923-24. It was so bad people were being paid twice a day, and literally took valises and wheelbarrows of cash to the store. (The link between time and money has never been so clearly illustrated.) Meanwhile, Germany’s inability to acquire gold perpetuated their inability to pay war reparations. We all know where that led. \\:=|
The value of gold is subject to distortion, too. Just because a gram of gold will buy a bag of groceries now doesn’t mean it will when other conditions prevail. Gold, obsidian, sea shells—what’s the difference? The value of gold is a construct, held up by nothing more than the faith that today’s economic, social, and political context will persist, more or less as is.
But when the jet stream’s age-old circulatory hub—the Arctic ice cap—disappears and global agriculture is fouled forever, the world will be fundamentally altered. You can’t eat gold. The belief that our economy will be cured of its ills if we go back to the gold standard is a mumpsimus.
If money is tied to any commodity, it’s oil. Money is a proxy for labor, which is a proxy for oil. Only the greatest potentates of old were able to command the power each ordinary Westerner does with the push of a button or the turn of a key.
Ninety percent of the U.S. population used to be farmers. But because of oil, it’s now two percent. That allows most of us to live in cities and still eat as if we farmed. We drive our fossil-fueled buggy to a store to buy our bread, which is grown with fossil-fuel-based fertilizer, harvested by fossil-fueled combines, ground in fossil-fueled mills, baked in fossil-fueled ovens, transported by fossil-fueled trucks, bagged with fossil-fuel-based plastics, and air-conditioned by fossil-fueled electricity, ours for the taking in exchange for a few bits of fossil-fuel-generated $data.
I suspect when the ice cap disappears in ten or fifteen years and tips us into the Great Unwind, and there’s one loaf of bread on the supermarket shelf for every two people who want it, gold, debit cards, or paper won’t make much difference.