I find it rather interesting that al-Qaeda and its allies are trying to put the world economy onto a gold standard.

I don’t think the choice is a stark one between fiat currency and the gold standard. I rather like the idea of a “food basket currency” — a currency whose value is pegged to an aggregate price of a basket of important commodities.

There are excellent reasons to oppose the gold standard that go beyond opposition to al-Qaeda and its advocacy of a gold bug ideology. Any currency pegged to the price of a metal encourages mining, while any currency pegged to government power encourages lobbying. Meanwhile, any currency pegged to agriculture encourages farming.

I think it is no mere coincidence that the invention of the Lydian gold coin promoted international trade in Greek antiquity, and yet, it is interesting how Egyptian and Mesopotamian agriculture declined over the centuries after the adoption of the gold standard. I think the reason is that the means to generate currency no longer came from agriculture but rather came from mining, thus vastly inflating the importance of Macedonia and southern Spain with their mines at the expense of the traditional breadbaskets of Tunisia, Egypt, and Mesopotamia. (Macedonian gold financed Alexander’s conquests while Spanish silver financed the Carthaginian and later Roman empires.)

Any currency can be manipulated. An agricultural superstate can use granaries to control a currency. However, an agricultural currency ensures that even a small garden is a de facto printing press for money, and thus has a liberating effect upon our currency.

Given the social power of gold in Arab countries, oil is pegged to gold. Gold effectively promotes the social power of Islamists. Fiat currency effectively promotes the social power of socialists. Agricultural currency effectively empowers food producers. Given how the United States of America is one of the world’s great breadbaskets, along with Canada, Australia, and Argentina, it would be in America’s geopolitical interests to promote a currency loosely pegged to a “food basket”.