In his brilliant essay on gold (Life & Arts, February 15), Phil Tinline reminds us of John Maynard Keynes’ opposition to the reconstruction of the gold standard in the interwar period.
Tinline refers to Keynes’ work A Treatise on Money in 1930, where the famous British economist quotes the “auri sacra fames” (which translates as “an accursed hunger for gold” — from Virgil’s Aeneid, later quoted by Seneca. As Keynes put it: “The auri sacra fames has sought to envelop itself in a garment of respectability as densely respectable as was ever met with, even in the realms of sex or religion. Whether […] gold is the sole prophylactic against the plague of fiat moneys, or whether it is a furtive Freudian cloak, […] gold has become part of the apparatus of conservatism and is one of the matters which we cannot expect to see handled without prejudice.”
Yet, Keynes depicting the history of money in the civilised world since some four or five thousand years ago, goes back to the early 1920s. Indeed, in The Price of Peace, Zachary Carter quotes Keynes’ writings to his wife, Lydia Lopokova, in January 1924, observing that “over the course of the 1920s Keynes was periodically gripped by an obsession with ancient currencies”. In these writings (JMK to LK), the British economist reviews his older essays on Babylonian and Greek weights, referring to “a Babylonian magician”, while in November 1925 — as Carter points out — he was writing again on Babylonian money, overwhelmed by the old currency.
Tinline — throughout the stories of Aesop, Midas, Tolkien and Scrooge — argues that “gold presents a moral test”.
Quite so. As Stefan Eich puts it in The Currency of Politics, referring to Keynes’ realisation that a return to gold would create deflationary instability, the value of gold was not simply given by nature but reflected international politics; a growing awareness that monetary hegemony had shifted decisively west across the Atlantic.
With or without the help from Sigmund Freud, world politics do matter. Even so nowadays, the era of unusual geopolitical uncertainty — that the globe lives in, at least since 2022 — seems to be a key factor influencing the rising price of gold.
Konstantinos Gravas
Lecturer, Department of Economics, Athens University of Economics and Business (AUEB), Greece
