In his fascinating recent book, The 21st Century Case For Gold, George Gilder flips the debate back against those who would denigrate the gold standard as a ‘barbarous relic’. For Gilder, fluctuating currency values are the relic, totally unfit for the modern world, rendered indefensible by cutting edge information theory, a major source of political and economic corruption, and one of our most significant barriers to progress.
The gold standard had developed a sort of ‘retro’ branding. It’s thought of as ‘pre’ — pre-Keynesian, pre-modern, a throw-back to the allegedly outmoded classical liberalism which was shattered by World War I. Gilder, however, is a man of the future, a technology forecaster who was early to see the power of the microchip and after that, once again early to see the expansive significance of the internet, and then one of the first to see the shift towards the cloud. Gilder’s biases seem to tend far more towards excess technophilia than towards nostalgia.
So then, what has shifted a man like this towards the gold standard? The mathematics which began to appear in the mid-20th century are the mathematics of the unknown. They appear at the limits of calculus and all other mathematical systems based on a deterministic future. They are about incompleteness of our systems (Kurt Gödel) or about intentionally hidden information (cryptography) and about possibilities ruled out and formerly unknown information being revealed (Claude Shannon). These new branches of mathematics make a more compelling case for gold than earlier branches of mathematics. Isaac Newton developed both calculus and the British gold standard, but even he could not yet see the chief advantage of that system. Mathematics from Euclid to Calculus is about counting quantity of what is seen: number, space, mass. Calculus added motion to the static formulae of ancient mathematics, but still did not transcend material categories. But our world is based on a leap into measuring something non-material and non-spatial — information. Information theory along with the incompleteness theorem makes the information age possible.
And that’s what brings us to gold. …
Read the full article at Forbes.com.
Jerry Bowyer is the Chief Economist of Vident Financial and a Forbes Contributor.
