Could the gold standard, surprisingly, become politically viable? Yes.
Here’s how.
Most politicians, of both parties, bitterly cling to the status quo. They are averse to unconventional proposals.
Proposals, that is, such as the gold standard. Until, that is, things get bad enough.
Near 7% inflation is bad enough to persuade at least some that it’s time to do what Walter Heller told the Congress on May 7, 1985: “Rise above principle and do what's right.”
No matter how hard President Biden tries to whistle past the peculiar political graveyard of inflation, he cannot evade this cold draft.
Despite all the blather about Biden’s profligate spending as driving inflation, that’s merely politically weaponizing fiscal policy. As Milton Friedman famously observed “inflation is always and everywhere a monetary phenomenon.”
Follow the money. One or more Republican presidential aspirants are likely to call out the real cause, prescribing the real cure. Time for the gold standard’s star turn.
As I noted at The Street in 2015, almost all academic economists have contempt for the gold standard. And almost all, with a handful of exceptions like the gold-standard-friendly Professor Steve Hanke, failed to foresee the current inflation.
Peter C. Earle and William J. Luther’s new and excellent The Gold Standard: Retrospect and Prospect, reviewed here, shows that the gold standard has an excellent track record for averting inflation while creating a climate of equitable prosperity.
Presidential aspirants? Follow the money!
So, can gold be a political winner? Yes.
A decade ago, polling showed that we voters, especially Republican caucusgoers and primary-voters, strongly favor the gold standard. As I wrote at Forbes in 2011:
“Rasmussen’s … recent poll show[ed] 44% of likely voters favor returning to the gold standard, 28% opposed. … Rasmussen’s results show that 79% of Tea Party voters (and 69% of simply self-described Republicans) would favor such an elitism-constraining gold standard.”
As I wrote at Roll Call in 2012:
“The Polling Company [in November 2012] found that advocating the gold standard would move votes where they most matter. The gold standard is highly popular with tea party voters, movement conservatives and others disproportionately likely to attend the Iowa caucuses or vote in the New Hampshire and South Carolina primaries.”
My advocacy propelled a monetary commission plank (explicitly including the gold standard) into the 2012, then 2016, Republican national platforms. This was surprisingly well received by media leaders such as the FT, wherein Robin Harding and Anna Fifield wrote, in Republicans to embrace gold in platform:
“The gold standard has returned to mainstream U.S. politics for the first time in 30 years, with a ‘gold commission’ set to become part of official Republican party policy.”
And what about actual candidates?
In the course of the 2012 primaries I met one-on-one with then-top-tier contender Newt Gingrich (long ago co-sponsor of Jack Kemp’s iconic “The Gold Standard Act of 1984”). The former Speaker responded with a call for a new Gold Commission.
His standing in the race was lofty … until the revelations of certain peccadillos torpedoed his candidacy. Somewhere around peak Gingrich, the Mitt Romney campaign brought me into their national campaign headquarters to brief them on the gold standard, likely eyeing the traction that Romney’s rivals were gaining with gold.
However, Romney’s Bain Capital-type conventional wisdom campaign “suits” steered away from field-testing gold. Romney, of course, went on to lose the general election.
Supply-side hero Steve Forbes made the gold standard part of his two presidential campaigns. Rep. Ron Paul, also a presidential contender, previously co-authored, along with my mentor Lewis E. Lehrman, the Reagan Gold Commission’s minority report, The Case for Gold and was widely seen as a gold standard advocate.
The late Herman Cain, also briefly a top tier presidential contender, praised the gold standard. And as I observed in The Hill in 2016, Ted Cruz, Ben Carson and Mike Huckabee all at least dipped a toe into the shallow end of the gold pool.
Looking forward to 2024, Vice President Mike Pence, speaking at the Detroit Economic Club in 2010, expressed interest in reestablishing the gold standard.
As duly noted in Bloomberg, Donald Trump loves gold. And Candidate Trump rhapsodized about the gold standard on the campaign trail twice in 2015:
"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 is more politically palatable, and powerful, than many pundits yet realize. With inflation wrecking our financial security the gold standard regains political relevance.
On to 2024. Onward to a golden age?
Stay tuned.
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. Read Ralph Benko's reports — More Here.
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