The United States needs to adopt a gold standard to end Chinese predatory foreign-exchange policies, stabilize the dollar and create a level playing field in the global trade arena, says historian, investment banker and author Lewis E. Lehrman.
For years, China has kept its currency artificially low to pump cheap exports into U.S. and other economies.
Such policy, made possible since the dollar serves as the world's reserve currency and used for trade and other transactions, has kept the Chinese awash in greenbacks, which Beijing reinvests in the U.S., thus making it a creditor to the United States.
A return to the gold standard, where the dollar and other currencies are valued by their weights in gold and not in relation to other currencies, would end China's ability to manipulate exchange rates as well as end Washington's dollar-printing schemes designed to pump banks full of money regardless of side-effects that include wild inflationary cycles.
Story Continues Below Video.
"China, as a mercantilist predator, is injuring not only our businesses, our labor, our manufacturing sector, but they are doing the same thing worldwide,” he said in an exclusive Newsmax.TV interview.
“Now therefore, why would we want to perpetuate the world dollar standard, which makes America so vulnerable? That is why we need the gold standard," said Lehrman,who heads the Gold Standard Now, a project of The Lehrman Institute, a public policy foundation that he founded in 1972.
"We need the gold standard to stabilize the dollar,” said the author of the upcoming book “The True Gold Standard - A Monetary Reform Plan without Official Reserve Currencies: How We Get from Here to There.”
: To pre-order 'The True Gold Standard' at a great price — Click Here Now.
“And we need for the gold standard to establish a level playing field in order that we can have stable exchange rates rather than these volatile floating exchange rates or the pegged, undervalued currency of the Chinese yuan."
That, Lehrman says, means the United States and other countries can enjoy free and fair trading conditions.
Resistance to a return to a gold standard, which was scrapped in the early 1970s, comes from banks, many of whom benefit when the Federal Reserve turns on the printing presses to tinker with the economy.
All that money must flow somewhere, and it normally flows into banks.
"The Federal Reserve essentially subsidizes the U.S. banking cartel with free money, that is to say near-zero interest rates. If you were getting free money from the Federal Reserve system to gain share of market by charging credit-card users 10 to 15 to 20 percent, you, too, would want to have a Federal Reserve system, which was unconstrained in the production of zero-cost money," Lehrman says.
Inside the World’s Greatest Retirement Lie
Study reveals disturbing truth: Millions have been victimized by the very people they elected. Learn the Truth, See the Details.
"What the gold standard does, and the convertibility of the dollar to gold, is it limits the present unrestrained capability of the Federal Reserve to print money without limit, which goes first to the bankers, then to the speculators, and I must say, which has enriched the financial class and impoverished middle-income families."
As a reserve currency, the dollar serves as a safe haven in world financial markets, but only in times of panic, leaving the greenback the only investment of choice due to its sheer abundance.
The currency's purchasing power, however, tells a different story of the dollar's worth.
"People who earned a dollar and save it for pensions, save it for college educations for their grandchildren in 1970, today they have 50 cents of purchasing power," Lehrman says.
"The entire middle class of America, and I must say working people and those on fixed incomes, has been impoverished by the paper dollar."
© 2015 Newsmax Finance. All rights reserved.