IN GOLD WE TRUST?

In Gold We Trust? uses the surge in the price of gold in recent years as a lens to explore the future of money. The economic crisis has caused a crisis of confidence in the dollar, the euro and all money based on the promises of governments.

Gold fundamentalists think we should turn back the clock to a system where money is based on gold. Most mainstream economists think this is madness and expect the current system to muddle along. Both are wrong. We argue that rather than being immutable, money is a technology. And, like all technologies, it evolves as what expect from it changes. In a multipolar world, the global economy cannot be based on the dollar, which represents the wobbly promises of the U.S. Federal Government. Instead, we expect money to evolve into a “portfolio” of monies. Gold, because it is familiar, has been investors’ first choice in building their monetary portfolios. It won’t be the last. The story of gold is therefore not about a return to past certainties but an indicator of an uncertain, unpredictable future for the technology we call money. Matthew Bishop is the U.S. business editor of The Economist and a former faculty member of the London Business School. Michael Green is a London-based writer who previously taught economics at Warsaw University and was a senior official in the British government.