Ethiopia's Central Bank Finds Fool's Gold

I think that the cynicism that libertarians have for government is confirmed almost every day whenever revelations of unbelievable corruption and incompetence is revealed. A story reported here and here about the discovery that a proportion of the bullions of gold in the National Bank of Ethiopia were fake would be funny if it were not tragic. Gold reserves and bullion in every central bank is considered the very basis upon which fiat money is issued with confidence.

Because all the facts are not out yet, I must be circumspect but this tells any curious student two main things. First, corruption and incompetence in the public sector can be quite baffling and the third is that considering that Ethiopian currency, the Birr is one of the stronger ones in the east African region, then the currency market is all about faith and perception. The gold standard is really dead! Consider that all this happens when the price of gold is rising.