Sen. Ted Cruz (R-TX) (photo credit: Gage Skidmore)Continue Reading
The LA Times’s Michael Hiltzik recently wrote a column slamming the GOP field in general and one of the two front-runners, Ted Cruz, in particular: The worst idea in the presidential debate: a return to the gold standard. Mr. Hiltzik thereby joins with a lot of usual suspects, like Paul Krugman and Larry Summers, in the ridicule-heaping ritual. Such conduct is unbecoming of him and his headline and conclusions are contradicted by a lot of reliable data.
There actually is abundant evidence that Ted Cruz’s proposal of the gold standard is the very best idea in the presidential debate so far and that Cruz is to be commended for it. There’s far more evidence for the goodness of gold than for considering it a bad idea. It certainly is not ridiculous. Let’s take a closer look.
Mr. Hiltzik, after his prerequisite preliminary orgy of ridicule, writes:
The gold standard is one of the few economic nostrums on which progressives and conservatives agree. Neither side likes it. Here, for example, is James Pethokoukis of the conservative American Enterprise Institute: “When GOP presidential candidates talk about the gold standard, I’m not sure if they’re serious or just signaling a certain segment of voters obsessed about inflation and the dangers of ‘fiat money.’ I sure hope they’re not serious and this is just campaign season silliness.”
The proposition is flat, factually, wrong that “The gold standard is one of the few economic nostrums on which progressives and conservatives agree.” Mr.
At AEIdeas, columnist and blogger James Pethokoukis again returns to a favorite topic, the gold standard. In “The deep myth at the heart of the gold standard,” Pethokoukis writes:
One political/policy fallout from the Global Financial Crisis — and the accompanying monetary easing and rise in public debt — has been the reemergence of the gold standard as something the center-right talks about. Unlike the fiat money US dollar, a gold-backed dollar — a dollar linked to something tangible — would prevent monetary mischief by government.
Pethokoukis is to be highly commended for adopting a more temperate tone toward gold than previously. He writes: “There might be a reasonable case for returning to the gold standard — I’m not a fan — but it’s really just another trust-based currency and should evaluated as such.” The proponents of gold would welcome an objective evaluation.
The excerpts he presents from a conversation between Russ Roberts and Yuval Harari of Hebrew University, however, implies a that there exists a fallacy widespread among gold standard proponents: that gold holds an intrinsic value.
I am well acquainted, both personally and with the works, of many, perhaps most, of contemporary gold standard sympathizers and advocates. Few, if any, hold to a doctrine of an intrinsic value to gold. That would, indeed, be a fallacy. But it’s not our fallacy.
Pethokoukis is close to correct that it really is “just another trust-based currency and should be evaluated as such.” That said, “just another trust-based currency” seems to imply trust in a form of discretionary, or as I frequently call it fiduciary, management. Continue Reading
Jeb Bush recently showed a dignified open-mindedness toward the gold standard. He thereby is much more to be commended than Neo-Keynesian columnists like Matt O’Brien — or “Reformocons” like James Pethokoukis — both of whom seem to value elite cachet over empirical data such as adduced by the Bank of England.
In his recent AEIdeas blog, AEI blogger James Pethokoukis writes “Jeb Bush was asked about the gold standard. He should have gone all Rick Grimes on that zombie idea”.
So Jeb Bush was asked on the campaign trail about returning to the gold standard. His answer: “I don’t know. I don’t think so. I don’t know for sure.” I think the WaPo’s Matt O’Brien is right that the following would have been the far better replay:
This was not the right answer. The right answer would have been that the gold standard was a “barbarous relic” even 80 years ago, and might be the world’s worst idea today.
Actually, the case for the gold standard, as recently restated in The Wall Street Journal by APP advisor Lewis E. Lehrman and John Mueller, is excellent, and Bush should be commended for keeping an open mind . Bashing the gold standard — and anyone who fails to condemn it in at least borderline-hysterical terms — seems a recurring obsession for Pethokoukis and O’Brien. Continue Reading