Once upon a time, back in June 2007, I suggested an experiment to test the theory of the gold standard:
At the time I was interested in testing Ron Paul’s assertions that returning to the gold standard would cure all of America’s economic ills, but as part of my thought experiment I threw out the a couple other suggestions:
It would also be interesting to see some variations on this theme in which an ulimited amount of gold can be purchased from Blizzard but items are strictly limited. Huge inflation I would bet. Or items and gold can be purchased from Blizzard. My bet there is the local trade economy would tank (Globalization analouge).
Well it turns out that Blizzard went ahead and tested the theory about unlimited gold and limited goods even if it was by accident:
in the last few months, various outposts in that world (Diablo III) — Silver City and New Tristram, to name two — have borne more in common with real world places like Harare, Zimbabwe in 2007 or Berlin in 1923 than with Dante’s Inferno. A culmination of a series of unanticipated circumstances — and, finally, a most unfortunate programming bug — has over the last few weeks produced a new and unforeseen dimension of hellishness within Diablo 3: hyperinflation.
Basically Blizzard created a virtual economy in which infinite amounts of gold could be accumulated very quickly and it drove the prices of goods through the roof. Precisely what just about anyone would have expected but since I wrote about this back in 2007 I am claiming prescience and genius.
It should be noted that as soon a Blizzard cracked down on the gold supply prices began to drop. The author of the Zero Hedge article thinks this proves the need for a gold standard. I think in my own uneducated way that it proves Friedman’s theories about control of the monetary supply more than it makes the case for a specie based currency, but as I said in the title I am a drooling mouth breathing moron so what do I know?