For many years I served as a leading public advocate for the classical gold standard. That job entailed many days laboring on Capitol Hill. One of the most respected and powerful of the Congressional aides I briefed (he is now working in the White House) said to me: "You’re the first guy pushing the gold standard in the 10 years I’ve worked here who isn’t a nut."
So — the gold standard has two problems.
One, its enemies. The other, some friends.
Powerful enemies include the clerisy: academic economists such as the 40 (only two or three of whom were monetary economists) polled by the Booth School almost a decade ago. They unanimously ridiculed the gold standard. The economic establishment scorns gold.
Gold boasts some high prestige fans such as Steve Forbes, Alan Greenspan, Lewis E. Lehrman, and Ron Paul. Alas, a demimonde of "gold bugs" was conjured up by pulp writer Harry Browne in his 1970 best seller "How You Can Profit from the Coming Devaluation."
While many profited from following Browne’s advice in the aftermath of the Nixon shock, later a cult-like dystopian subculture preached that the paper dollar standard would collapse, imminently. And that gold would rise to $5,000 or even $50,000 an ounce. Nothing of the kind occurred, giving the gold standard a PR black eye.
Nevertheless, the case for the gold standard is strong.
Donald Trump, in 2015, observed, "We used to have a very, very solid country because it was based on a gold standard," as he told WMUR in New Hampshire. Someone having misinformed him he thought it would be tough to bring it back because "we don’t have the gold. Other places have the gold."
(Actually the United States has the most gold of all nations.)
Trump also commented to GQ: "Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money." Trump got that exactly right.
The Bank of England — no hotbed of crackpots, academic or otherwise — published a white paper in 2011, Financial Stability Report No. 13: Reform of the International Monetary and Financial System.
Forbes.com columnist Charles Kadlec summed it up: "Had the trends under Bretton Woods (gold-exchange standard) continued, the average person’s real income would be nearly 50% higher, the increase in prices would be nearly 50% lower, trade imbalances would be nearly one-third smaller and the world economy over the past four decades would have suffered through 4 instead of 104 banking crises."
In 2012 Jens Weidmann, the head of the German central bank, observed in a speech titled Money Creation and Responsibility that gold is a "timeless classic."
Paul Volcker, perhaps the greatest central banker in modern history, while not a gold proponent, said in his foreword to Marjorie Deane and Robert Pringle’s The Central Banks: "By and large, if the overriding objective is price stability, we did better with the nineteenth-century gold standard and passive central banks, with currency boards, or even with 'free banking.' The truly unique power of a central bank, after all, is the power to create money, and ultimately the power to create is the power to destroy."
His successor Alan Greenspan belatedly revealed that his great track record as Fed Chairman during the Great Moderation — with its steady, high, job creation — was rooted in gold. Greenspan, in 2017, told The World Gold Council’s Gold Investor, "I view gold as the primary global currency. … Today, going back on to the gold standard would be perceived as an act of desperation. But if the gold standard were in place today we would not have reached the situation in which we now find ourselves."
Prof. Robert Mundell devoted the bulk of his 1999 Nobel Prize acceptance speech to a trenchant and positive review of the operations and outcomes of the gold standard. “The international gold standard at the beginning of the 20th century operated smoothly to facilitate trade, payments and capital movements. Balance of payments were kept in equilibrium at fixed exchange rates by an adjustment mechanism that had a high degree of automaticity."
Testimonials can be found from some of the most eminent practitioners and theorists of the occult monetary arts: Trump, Volcker, Greenspan, Weidmann, Mundell, Forbes, Lehrman, Paul and the Bank of England among them. Moreover, gold’s intellectual pedigree runs from Copernicus (astronomy) to Newton (physics) to Priestley (chemistry).
The gold standard compiled an impressive track record of generating equitable prosperity for centuries. The classical gold standard has earned a place in Capitalism’s Ten Commandments, many times over. Commandment Six: "The dollar shall be defined as a fixed weight of gold legally convertible thereunto by any person or entity, foreign and domestic."
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of "The Capitalist League," is the founder of The Prosperity Caucus and is an original Kemp-era member of the Supply Side revolution that propelled the Dow from 814 to its current heights and world GDP from $11T to $88T. He served as a deputy general counsel in the Reagan White House, has worked closely with the Congress and two cabinet agencies, and has published over a million words on politics and policy in the mainstream media, as a distinguished professional blogger, and as the author of the internationally award-winning cult classic book "The Websters' Dictionary: How to Use the Web to Transform the World." He has served as senior adviser, economics, to APIA as an advocate of the gold standard, senior counselor to the Chamber of Digital Commerce and serves as general counsel to Frax.finance, a stablecoin venture. Read Ralph Benko's reports — More Here.
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