Think on: “Non teneas aurum totum quod splendet ut aurum.” ALAIN DE LILLE, Parabolae
Tumbleweed’s having a bit of fun with y’all here. In plain English, “All that glitters is not gold.”
So, my family tells me that writing a post about the “gold standard” is simply too heavy for most folks to absorb. Well, that may be because most people don’t know what it is, and when they do hear about it, it’s usually being treated with derision as something archaic. Interesting. Once again, our education system has let us down by giving in to the progressive lefties in our mix. Heaven forbid that our founding fathers and capitalism should make sense. By definition a gold standard is a monetary system in which the standard economic unit of account is based on a fixed quantity of gold.
Currency manipulators chalk up a win! Actually, the United States was technically on the gold standard until President “Tricky Dick” Nixon signed its death warrant on August 15, 1971. That’s not really that long ago. The question is why was it dumped? If you follow to economists like Friedrich von Hayek, Ludwig von Mises, Henry Hazlitt, or Nathan Lewis, you’d understand that the key to great economic booms is stable currency. Oh, and you may have heard of a fellow named Adam Smith who framed capitalism in his Wealth of Nations treatise. Effectively, hardly anything in an economy is created without combining goods, services, labor, and capital networked through use of money and shared via prices, interest rates, profits, and losses. Whew! That’s a mouthful and likely pretty dry stuff for many people. Bottom line, a stable currency is critically important. An unstable currency in an economy is like a computer virus, corrupting “bits” of the economic program to create destructive bubbles not unlike 2007. For example, in 2001, our beloved Federal Reserve deliberately weakened the dollar, and that drove oil from $20 a barrel to more than $100 a barrel.
Gold lost its luster. Gold affords a fixed weight and measure to the value of products and services. (For those concerned with today’s fluctuating price of gold, it’s simply a reflection of wildly fluctuating world economies based upon U.S. paper – not gold.) The gold standard’s demise pretty much began in the 1890s with Democrat William Jennings Bryan’s pro-inflation, anti-gold presidential run. The Great Depression – of which the gold standard was a victim not a cause – gave the left-wingers the ammo to further sow the seeds for playing vague paper-money games via central bank theory, aka, the Federal Reserve. They embraced John Maynard Keynes (Heard of Keynesian economics? Try socialism or social capitalism.), and stable monetary value went down the toilet from there. Throw politicians into the socio-economic mix, and we’ve got a volatile concoction that has throttled the U.S. economy ever since. People don’t understand the complexity, and this translates into fear that politicians prey upon. While capitalism may seem complex, the seeming simplicity of socialism becomes attractive until you learn its fatal flaw as articulated by George Orwell in Wigan Pier. That is, socialists actually don’t like the poor; they merely hate the wealthy. Unstable currency enables the socialist mantra of power in the hands of a few and keeps the road to serfdom wide open.
President Ronald Reagan tried and failed to restore the gold standard in the 1980s, as he was blocked by Keynesian progressives sowing fears that social justice causes would be destroyed through economic stagnation, rampant inflation, and political upheaval. Hmmm. It seems that’s exactly what the Keynesian central bank acolytes have wrought for us today.
So, my family is probably right. The gold standard and its critical importance might be too much for most folks to grasp. For my part, I wish more citizens would get a hot branding iron in their pants toward returning to the gold standard. Just sayin’.