It is one thing when a newbie politician like incoming Kentucky Senator Rand Paul calls for a return to the gold standard. It is more of a shock when an establishment figure like Robert Zoellick, the president of the World Bank, warms up to gold. Zoellick brings it up in a Financial Times piece ahead of the Group of 20 meeting in Seoul.
"The system should also consider employing gold as an international reference point of market expectations about inflation, deflation and future currency values."
That could ignite a firestorm of controversy between economists who see a gold standard as a global stabilizer and those who see it as a job and growth-killer. What could invite more consensus is Zoellick's call to reengineer the global financial architecture.
"The development of a monetary system to succeed 'Bretton Woods II' launched in 1971, will take time. But we need to begin. The scope of the changes since 1971 certainly matches those between 1945 and 1971 that prompted the shift from Bretton Woods I to II."
The gathering of the great and the good that produced the post-war financial system was worked out in Bretton Woods, New Hampshire. It may be time to go online and book some hotel rooms up there.
Photo: Gold by the Glass, Cleveland, Ohio. (David Brancaccio 2010).