The gold price fell, dramatically, and now is bobbing about. Meanwhile, the prospects for implementing a 21st century gold standard continues to rise. Dramatically.
In a recent media monetary policy media slugfest between The New York Times and The Atlantic, on one side, and Bloomberg.com and Forbes.com on the other, analyzed here, recently, the gold standard prevailed. It is noteworthy that gold’s victory in that skirmish came in a larger context.
The gold standard used to be consigned, mainly (to borrow a perfectly turned description from the Wall Street Journal’s Gregory Zuckerman and Carolyn Cui) to those with “bleak economic outlooks or dystopian views of society.” Then, many of gold’s proponents could be dismissed, facilely if not quite fairly. The gold standard had been frozen out of elite discourse.
No longer. The discourse has changed.
Whether one supports it or opposes it, the gold standard no longer is seen by most serious thinkers as fringe. It no longer is dismissible merely by invoking shibboleths like “barbarous relic” or “cross of gold.” Facts are stubborn things, as John Adams once observed. Facts are much more stubborn than mere mockery.
There are reasons for the turnaround in the gold standard’s reputation. Rigorous thinkers such as analysts from the Bank of England, in its December 2011 Financial Security Paper No. 13, “Reform of the International Monetary and Financial System", have assessed the performance of the fiduciary dollar standard and found it deeply inferior to the actual performance of both the gold and of the (before it inevitably, due to an inherent latent defect, collapsed) gold-exchange standard. Now, after 12 years of “Dark Ages” economic growth rates, the incumbent monetary policy elites are beginning to appear slightly desperate to justify their prestige and attendant privileges.
Academic economists, almost to a man, still bitterly cling to a hostility to the gold standard. On Valentine’s Day 2012 Prof. Austan Goolsbee memorably tweeted: “Roses are red. Violets are pink. Don’t listen to goldbugs. No one cares what they think.” He thereby threw into doubt his grasp of doggerel, horticulture and...monetary policy.
Yet reality is beginning to penetrate the culture notwithstanding the phalanx of mortarboards. Academics of authentic intellectual integrity stand apart from the reactionary phalanx. These notably include retired University of Georgia Prof. Richard Timberlake, Prof. Lawrence White of George Mason University, Prof. George Selgin of the University of Georgia, and Prof. Steve Hanke of Johns Hopkins University, among others.
Now Rep. Kevin Brady, chairman of the Congressional Joint Economic Committee, has introduced legislation to stabilize the dollar with reference, among other things, to gold, and another bill to convene a meticulously neutral bipartisan monetary commission to study six monetary policy regimes, including, with equal dignity, the gold standard.
Now as many as a dozen state capitals are directing their attention, in one way or another, to monetizing gold. The elite media has taken note of this as significant. It has notably been featured in The Washington Post, “Virginia coin moves closer to reality”, at Bloomberg.com’s “Trust in Gold Not Bernanke as U.S. States Promote Bullion” and Gillian Tett in the FT Magazine, “Is the Dollar as good as gold?”
Mainstream political strategist Dick Morris, formerly, as a critic of the prophetic and dignified Ron Paul, was a gold standard mocker. Now Morris pivots, enthusiastically, to embrace gold, saying: “Let’s face it. Politicians have abused the right to print money. We cannot trust them to limit their power and to face fiscal facts. The abuses of Obama and Bernanke illustrate this grim fact for all to see. Gold is coming!” (This columnist hastens to note: there is no need, or benefit, politically to weaponize the gold standard. Properly configured it is neutral, leaning neither right nor left.)
The gold standard, in a new incarnation, quite obviously no longer is a fringe issue. It has entered the mainstream. The conservative, libertarian, and Tea Party Republican voter base, and the ethnic and union members of the Democratic voter base, are receptive. Interestingly, blacks and union members, when polled, appear even more enthusiastic for gold than libertarians and conservatives.
Now the gold standard now is beginning to move beyond the op-ed pages, pages which often serve as, as Clausewitz said of war, “politics by other means.” The gold standard proposition is dignified by invitation of its proponents to dignified forums. These are worthy of a closer look. ProCon.org is a nonprofit forum with the mission of “Promoting critical thinking, education, and informed citizenship by presenting controversial issues in a straightforward, nonpartisan, primarily pro-con format.” Last year it informed over 15 million unique visitors and served up almost 60 million page views on a variety of interesting controversies.
ProCon.org is a resource for the engaged citizen seeking out both sides of issues. It was called by The New York Times during the last election cycle “The most comprehensive tool for researching the candidate’s stance on issues”. Wikipedia, watch your back: ProCon.org is sneaking up on you.
ProCon.org recently opened up an impressively presented section on the renewed gold standard debate. It cites Prof. Krugman and Ben Bernanke as leading opponents; Rep. Ron Paul, following the Austrian model, and Lewis E. Lehrman, with whose Institute this writer has a professional association, following the conservative model, as lead proponents. (It also includes, among others, five members of the Forbes publishing stable, Steve Forbes, Charles Kadlec, Prof. Brian Domitrovic, Nathan Lewis, and this columnist, as proponents.)
ProCon.org may be the most impressive resource of its kind but it is by no means alone in taking a respectful interest in the arguments for (and against) gold. Intelligence Squared recently featured a debate featuring publisher Steve Forbes and editor and author James Grant, leading gold proponents, against two gold opponents. Debate.org “a free online community where intelligent minds from around the world come to debate online and read the opinions of others” now presents a section on the merits of the gold standard.
These forums are rigorous, not fringe. They do not pit astrologers against astronomers, phrenologists against neurologists, or alchemists against chemists. Their treating the proponents and opponents of the gold standard with equal dignity is an important indicator of gold’s newly regained legitimacy.
It is worthwhile, also, to take a closer look at Congressional Joint Economic Committee Chairman Kevin Brady (R-TX) who, with a dozen colleagues, has introduced legislation, HR 1176, chartering a national centennial (of the Fed) monetary commission. The commission’s stated purpose is to study the empirical track record of six different monetary regimes, explicitly including the gold standard. This is not a gold commission yet provides additional evidence, were any necessary, of the restored respectability of the gold standard as a monetary policy reform option.
Let it be noted that the Monetary Commission of the Indianapolis Convention of 1897-98 laid the groundwork for the Gold Standard Act of 1900. The National Monetary Commission, 1909-1912, did the heavy lifting that made possible the chartering of the Federal Reserve. (The Fed was designed to more proficiently administer, rather than supplant, the gold standard and would benefit from returning to its intended mission.) Both commissions dramatically transformed both policy and history. There are ample reasons to believe that a Centennial Monetary Commission might have similar impact.
The FT, the Wall Street Journal, NationalInterest.org, and Forbes.com (the last two admittedly by this writer) prominently observed, last summer, that the gold standard has gone mainstream. It is beginning to dawn on our public intellectuals that it was the so-called “interwar gold standard” — the gold standard’s “evil twin” — that precipitated the Great Depression. The classical gold standard was innocent and deserves to be exonerated and restored to polite society where it can contribute to general prosperity and welfare.
Monetary policy can be a force for stagnation, as now. Or it can be a force for fostering a climate of equitable prosperity and robust job growth. Time for elected officials, public intellectuals, journalists and us regular citizens to examine the evidence.
The discourse about the gold standard has changed.