Donald Trump (mysteriously) has not played his “trump card” regarding the voters’ biggest pain point, “inflation.” Media not as enlightened as Newsmax calls our high cost of living “inflation.”
Not quite right. Inflation is an annual measure of the decline of the purchasing power of a weak dollar. “Cost of living,” as cumulative, would be more accurate.
That said, we get it. Groceries, gasoline and housing are painfully expensive.
How to fix that? The classical gold standard … which Trump explicitly admires.
Timothy L. O’Brien wrote for Bloomberg in 2016, “Donald Trump Loves Gold and Don’t You Forget It.”
And … “Bloomberg’s Michelle Jamrisko reported, during the 2016 campaign, Make America Gold Again: Calls for Everyone’s Favorite Standard Are Back Again, about how Donald Trump … spoke positively about, or campaigned on, gold.”
Trump on the stump:
- "We used to have a very, very solid country because it was based on a gold standard," Trump told WMUR television in New Hampshire in March 2016.
- Trump 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."
The gold standard, as Kemp Foundation adjunct fellow Sean Rushton writes recently, would be easy to do. Even better?
As prescribed right here at Newsmax not long ago.
“… Lewis E. Lehrman, the eminent Reagan Gold Commissioner, was the architect of the Kemp [gold standard] plan … whose formula he laid out to perfection in his book The True Gold Standard — a Monetary Reform Without Official Reserve Currencies.”
We voters now buy gold bars at Costco! Gold would be a vote magnet.
Trump’s recent declaration (surely dramatic license, but… yikes!) would be a terrible, horrible, no good, very bad, policy.
As I wrote here recently:
Trump promises: “Prices will come down,’ Trump told voters during a speech last week laying out his vision for a return to the White House. ‘You just watch: They’ll come down, and they’ll come down fast, not only with insurance, with everything.”
CNN dryly observes: “… broad-based price declines are not only improbable, they would bring about a doom loop difficult to escape from.”
Ruh roh! Deflation indeed can be even worse than inflation.
Winston Churchill found out the hard way. As London School of Economics’ James Morrison wrote, “Winston Churchill’s decision in April of 1925 to resume convertibility of the Pound Sterling at the pre-WWI parity prompted one the greatest financial crises of the century.”
“Churchill himself commented: “’Everybody said that I was the worst Chancellor of the Exchequer that ever was. And now I’m inclined to agree with them. So now the world’s unanimous.’”
The deflation Churchill thereby caused threw Great Britain into a long hard depression. He considered it “the biggest blunder” of his life.
So? How to address the voters’ pain?
By stoking our earnings growth. Not deflation.
America itself experienced a long, slow, painful deflation after the Civil War. That deflation led to the rise of the “prairie populist” movement and the nomination of the anti-deflationist (“free silver”) William Jennings Bryan.
Bryan presented perhaps the most ringing declaration in presidential campaign history … against deflation: “You shall not press down upon the brow of labor this crown of thorns. You shall not crucify mankind upon a cross of gold.”
The Great Depression itself primarily was caused by the dollar’s fixation to gold at $20.67/oz … when the general price level had risen by 50% due to the adoption of the insidiously defective gold exchange standard in 1922. Deflation bad!
What can Trump do to slay inflation (à la Reagan)?
First, endorse the call of money manager Sean Fieler (with whom I long ago was professionally associated) for the replacement of ZIRP (Zero Interest Rate Policy) with ZIP (Zero Inflation Policy). Endorsing ZIP would give Trump even greater anti-inflation cred.
Second, the iconic Steve Forbes, with two colleagues, recently re-issued their book Inflation: what it is, why it’s bad, and how to fix it. Forbes lays out decisive arguments on how to use gold to fix voter pain.
Steve Forbes would make a fine addition to Trump’s transition team, joining gold-sympathizer RFK Jr. Then … put Forbes in the Cabinet, preferably at Treasury.
Third, Dr. Arthur Laffer, to whom Trump awarded the presidential medal of freedom, was one of the chief architects of Reagan’s successful plan to bring down double digit inflation, end stagnation and make America prosperous again. Dr. Laffer was an early proponent of the gold standard and would make a superb Trump Fed chair.
Inflation is a red-hot voter issue. Donald Trump would be shrewd to campaign on a promise to crucify inflation upon a cross of gold.
Could be his golden ticket.
(Readers may wish to learn more by accessing William Jennings Bryan’s famous “Cross of Gold” speech.)
Ralph Benko, co-author of "The Capitalist Manifesto" and chairman and co-founder of the 200,000+ follower "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 $104T. Read Ralph Benko's reports — More Here.