New column: All that glitters (it’s about gold, get it?)

By Justin Fox | November 30, 2009 | +

My new column is online and in the issue of TIME with the crying baby on the cover.

While we’re on the topic of the cover, I should mention that Andy Serwer’s cover story on The Decade From Hell is not purely an exercise in looking through the rearview mirror. Well, actually, it is mostly an exercise in looking through the rearview mirror, but I also have a distinct memory of Andy, at some point in 2001 or 2002 (it couldn’t have been 2000, when he was still bullish), going on one of his trademark rants about what a crummy decade the 2000s were going to be. “It’s the ’70s all over again,” he said. Pollyanna that I am, I doubted him. And he was wrong: It wasn’t the ’70s all over again. It was worse.

So when Andy says the next decade is going to be better, as he does in his essay, I believe him. Although of course Nassim Taleb would say I’m a fool for doing so.

Related Topics: gold, Economy & Policy

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curmudgeon57

I read Andy Serwer’s story, and it was pretty good. But it has one major flaw, and well, one minor one. The major flaw is that the decade as he defines it is an artificial measurement. He speaks of the first decade of the 21st century as having some definable characteristics, but in reality, he can pick any ten-year period, whether or not it lines up with 0-9 on the calendar, and define characteristics for that period. There is nothing magical about 2000-2009.
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The minor flaw was his flat assertion that markets always revert to the mean. In reality, they do, until they don’t any more.
pneogy

“The minor flaw was his flat assertion that markets always revert to the mean. In reality, they do, until they don’t any more.”

Are you questioning J.P. Morgan’s dictum: the market will fluctuate?
gatesvp

I’m sorry that you only got space for the summary blurb on gold. I’d honestly love to hear about the future on things like goldmoney.com.

As a guy who works in the field of Virtual Currency, I think that we’re going to see an explosion of currencies. And not just the “virtual” ones. There’s been a rise in stored value cards (gift cards, pre-paid mastercards, etc.) Pre-paid phones are stored value containers for many and they’re not far from becoming wallets. Text message are being used to replace small money transfers in Africa.

I think what we’re going to see is a new shift in the way we even treat currency.

It starts with ubiquitous digital money transfer, but I think it goes even further. Most people already carry multiple currencies in their wallet, we just don’t think of it that way. I have two pre-paid coffee shop card (which are denominated in USD, but are backed by faith in Startbucks . I have a pre-paid Amex I received as a company gift, I have an Air Miles card (a Canadian Loyalty card), I also have both Canadian and USD bank accounts. I have a Paypal account that was carrying cash I pulled from a Bing Cashback, both of which were basically issuing IOUs at some point.

At the end of the day we’re moving towards the relative ease of the digital IOU. And with it comes the break-down of traditional currencies. It’s not just paper money anymore. It is stocks & bonds that are easy to buy (remember how it was in 1993?). In 2 more years when Prosper finally gets big, it won’t be hard to issue loans or receive them or even buy them. You can already buy fractional pieces of gold and silver and spot price them at any time, so they’re one step away from becoming their own de-facto currency.

Either way, i’d love to hear about goldmoney and any other following such a path. I’m already a fan of pegging currencies to the “basket of goods”, but I think the only way that happens is to have pieces of the “basket” really become de facto.