The edible gold indicator (I)

What does it mean when people eat money?

I sent this letter to my father in mid-1999, when I was running a San Francisco technology company:

Dear Dad,

I don’t know if you remember my college friend Richard? He’s now professing at Yale. He’s established a custom that whenever he’s in the Bay Area visiting his parents, he and I go out for dinner at a different extravagant restaurant.

This is on the theory that we are both rich. He’s rich because he has a deal with Microsoft that they give him a million dollars a year in exchange for however much of his time he feels like giving them. Apparently he once off-handedly told them something that made them tens of millions of dollars and so they figure it’s worth hoping he’ll do it again. I am also theoretically rich because I own most of a company that is supposedly worth squidloads, although I have no actual cash-type money.

It seems that every time he is here, the restaurant we go to is more absurd. It’s a sign of the times…

The one we went to last night specializes in “tall food”, the latest thing, in which the chef, by divers architectonic stratagems, contrives to elevate food, using only its own structural integrity, as far as possible off the plate. That the meal was not particularly tasty was surely not the point, as it was undoubtedly impressive.

I ordered a custardy dessert that was richly marbled with real gold leaf. How could I not, having read of such things only in history books? Roman emperors and robber barons. Richard and I decided to pass on the $300 half-bottle of Sauternes—he regretfully, and I derisively.

When our desserts arrived, and he was tapping his dubiously with his spoon—there being no obvious way to consume it without first toppling it, which (as it was considerably taller than its plate was wide) would seem to entail sprawling it across the tablecloth—

“You know what this is?” I asked: “This is fin de siecle decadence, is what this is.  And it will end badly.”

Love,

David

Six months later the US stock market reached its all-time peak of overvaluation, immediately followed by its worst crash since the 1930s.

That was not as badly as I expected it to end—because a new bubble was blown within a year. (The subject of a post to come.)

Gold is biologically inert: tasteless, non-toxic, and indigestible. It goes straight through.

What does it mean when people eat money?

I read Thorstein Veblen’s Theory of the Leisure Class later that year. The book is famous for introducing the concept of “conspicuous consumption.” It made a big impression on me, and is still a big part of how I see the world. Veblen published it in 1899, exactly a hundred years earlier, when he was at Stanford, in the age of the San Francisco Robber Barons—the city’s last big boom.

Veblen’s work has a lot to say about why people eat gold during financial bubbles. But I don’t think he has the whole explanation. Maybe some other stories I can tell will add to the picture…

Advertisements

Author: David Chapman

Author of the book Meaningness and several Buddhist sites.

3 thoughts on “The edible gold indicator (I)”

  1. This reminds me of my summer semester at LSE in 2008. LSE students get a great deal. They get to live in London city centre accommodation for student prices. So, I was living in a basement in the City, a few yards from Chancery Lane and the Gherkin (which probably makes more sense as the Cucumber in US terminology but ought to be the Asparagus, imo). I am passionate for tea, especially though not exclusively of the green variety, and, the City being a place where one can find Everything within 200 yards of where one is, naturally there was a green tea bar round the corner from where I lived. And, naturally, it is more pleasant to do one’s necessary revisions in a green tea place than in a basement.

    Around May 2008 they introduced 2cm cube-sized matcha cakes with gold leaf twiddles. About 15 of them would have done nicely as an afternoon snack, but at £7 a shot I gave them a miss. I remember thinking something along the lines of:

    “I am sitting in a tea-bar in London looking incredulously at matcha cake with gold leaf embellishment because: the yuan is pegged to the American $, Chinese peasants are funding Western consumerism, and anyone who anyone listens to is saying ‘it’s different this time.’ This is going to end badly.”

    Next time I’m in London I’ll check out the tea place and see what they’re serving. If they still exist.

  2. I was trying to understand your essay but got lost.
    I am assuming you are saying, “über-consumption” is bad (in that it will end badly).
    Are you saying it is good to buy gold now?

  3. Well, there’s no Aesop here. I’m more just pointing at monkeys and saying: Gosh, they do odd things! I wonder why? Isn’t it funny?

    The basic Veblenian analysis is that people eat gold to signal wealth. But Richard and I weren’t trying to impress each other or anyone else; and I suspect we weren’t the only ones eating gold without that signaling motivation.

    I used “indicator” because in investment jargon it means “a sign of things to come.” I don’t want to give away the punchline to a future post, but there’s one other time I ate gold… and 2008 was not a great year in the financial markets.

    I think financial bubbles are bad (although I have repeatedly made money off them), and should be prevented.

    I have no idea whether it is good to buy gold now. I’m definitely not offering investment advice!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s