Paul Krugman tweets:
Are people noticing that the Trump economic team is shaping up as a gathering of gold bugs? 1/
— Paul Krugman (@paulkrugman) December 20, 2016
That tweet is part of a recent series by Prof. Krugman divining glints of gold in the company of Donald Trump. He predominantly focuses on one of Trump’s appointments, Rep. Mick Mulvaney (R-S.C.) for Office of Management and Budget (OMB).
Krugman astutely points out that Mulvaney once observed that the Federal Reserve has “effective devalued the dollar” — hard to argue with when the dollar has lost 85 percent of its buying power since Richard Nixon closed the gold window in 1971 — and “choke[d] off economic growth.” This is also hard to argue with after 16 years of booms and busts that have left the average US growth rate at about half of its historic trend line for that dreary epoch.
Krugman does not furnish evidence that Rep. Mulvaney has endorsed the gold standard. One can but hope his inference is well grounded.
Exhibit B for his tirade is contained in a tweet referencing investor John Paulson, reportedly close both to the treasury secretary designate Steve Mnuchin and Donald Trump himself. Paulson had recently been invested heavily in gold before slashing his position this year.
My research has not revealed any evidence that John Paulson is a gold standard advocate, affectionately known as a “gold bug.” The record shows Paulson to be an active speculator in gold who has, on balance, done well for his fund thereby. A rather different thing.
As for the merry epithet “gold bug,” when campaigning for president in 1896 William McKinley, against the eloquently anti-gold William Jennings Bryan, adopted a gold bug lapel pin as a campaign button.
McKinley, of course, won. He enacted the Gold Standard Act of 1900. The economy hummed. So much for Krugman’s High Anxiety.
I purchased a McKinley campaign lapel pin 40-something years ago. And I was called as one of the 23 official witnesses before the Reagan Gold Commission in 1982 and invited to a modest party with the Senator who sponsored this legislation, the formidable Jesse Helms. I presented the gold bug to him as a gesture of thanks. Sen. Helms at first demurred, out of ethics concerns. I told him I’d be embarrassed to tell him how little it cost. On that basis he accepted my small tribute, saying “Dot (Helm’s wife) will love this.”
More research by Krugman would have uncovered two warmly pro-gold standard statements by the president-elect and one sympathetic statement by the vice president-elect while Mr. Pence was still in Congress. While I certainly hope that Krugman’s observation that “the Trump economic team is shaping up as a gathering of gold bugs” the record seems to indicate that the Trump economic team is distinguished for its commitment to tax rate cuts, rolling back oppressive regulation, and rectifying merchandise trade imbalances … with hints of healthy interest as to how the gold standard might contribute to making America great again.
While “a gathering of gold bugs” appears overoptimistic on Prof. Krugman’s part, there are grounds for optimism that the Trump administration may hit upon the classical gold standard as a valuable, arguably crucial, element to making America great again.
Ralph Benko, internationally published weekly columnist, co-author of The 21st Century Gold Standard, lead co-editor of the Gerald Malsbary translation from Latin to English of Copernicus’s Essay on Money, is American Principles Project’s Senior Advisor, Economics.