Tuesday, May 13, 2008

The Great Contrivance

I thought this article from a few months ago was interesting, and frustrating. People will lobby for anything – even the price of gold. I just don't get it. We don't back our internationally-exchanged currencies with gold because we've seen how it can, at times, put internal equilibrium on a flimsy house of cards, yet we hold gold in our vaults. Still more confusingly, we let the world gold council lobby the IMF, World Bank, and even individual governments to further their own interests and prevent the further sale of sovereign gold reserves (something that would depreciate the market price of gold) - successfully. Some of the things the World Bank and IMF did to try to bring transparency, credibility and market reforms to the countries the lent to was very helpful, but I can't imagine why anyone should give a rat's patoot about gold in a post-Bretton-Woods world.

Cases like this is what lead the "antiglobalizers" to feel as if there's a vast conspiracy against the developing world. When the ideology of the IMF and World Bank changed in the 1980s, it seems like all we really did was trade one form of corruption (one that was known) for another (that was shrouded in "credibility" and "austerity"). The strange habits of these institutions in these areas discredits unambiguously win-win reforms like trade liberalization and distorts public opinion against globalization.

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