Paul Krugman: “The Trump Economic Team Is Shaping up as a Gathering of Gold Bugs”

Paul Krugman tweets:

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. Continue Reading

Paul Krugman Attacks Ted Cruz and Paul Ryan on Gold

Prof. Paul Krugman (photo credit: Commonwealth Foundation via Flickr, CC BY 2.0)

Paul Krugman, from his New York Times perch on March 25 writing “Crazy About Money,” lets himself go nuts recycling his standard arguments against the gold standard. He throws some mud at presidential contender Ted Cruz and House Speaker Paul Ryan. Doesn’t stick. Krugman:

… Mr. Cruz has staked out positions on crucial issues that are, not to put too fine a point on it, crazy. How can elite Republicans back him?

[…]

And then there’s a subject dear to my heart: monetary policy. You might be surprised to learn that few of the subjects I write on inspire as much passion — or as much hate mail. And it’s a subject on which Mr. Cruz has staked out a distinctive position, by calling for a return to the gold standard.

This is, in case you’re wondering, very much a fringe position among economists. When members of a large bipartisan panel on economic policy, run by the University of Chicago business school, were asked whether a gold standard would be an improvement on current arrangements, not one said yes.

In fact, many economists believe that a destructive focus on gold played a major role in the spread of the Great Depression. And Mr. Cruz’s obsession with gold is one reason to believe that he would do even more economic damage in the White House than Mr. Trump would.

So how can elite Republicans — people who have denounced Mr.

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Ted Cruz Has the Best Idea in the Presidential Debate: A Return to the Gold Standard

Sen. Ted Cruz (R-TX) (photo credit: Gage Skidmore)

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.

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The Anti-Science of William Jennings Bryan and Paul Krugman

Cartoon by Grant Hamilton, printed in “Judge” Magazine, 1896. (Public domain image)

From Forbes.com:

July 9th was the anniversary of the most famous speech of any presidential campaign.  William Jennings Bryan, in a speech to the 1896 Democratic convention, declaimed “You shall not crucify mankind upon a cross of gold.”

Although Bryan lost the general election to pro-gold William McKinley (and lost two other presidential races) that line still rings in the popular imagination.  It represents a handy epithet against the gold standard by those who are unfamiliar with its history or superior track record.

As, in 1896, noted by The Nation and reprised there last week, rather surprisingly but for Karl Marx’s recognition that “money is by nature gold and silver:”

His speech to the convention was an appeal to one of the worst instincts of the human heart—that of getting possession of other people’s property without the owners’ consent. That is what is meant by free coinage at 16 to 1. All business and all obligations rest to-day, have rested for nearly a quarter of a century, on the gold dollar as the unit of value. It is proposed now to substitute a silver dollar for it worth about half as much, and to make this depreciated coin applicable to all existing bargains and contracts…

This speech swept the young silver-tongued orator to a presidential nomination. Bryan provides a fascinating historical juxtaposition to George Gilder’s exposition of the science behind the gold standard, in The 21st Century Case for Gold: A New Information Theory of Money, commissioned by The American Principles Project, whose sister organization I professionally advise, here reviewed by me, also last week.  

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Rand Paul Draws Liberal Fire Over Audit the Fed, Part Two

Prof. Paul Krugman (photo credit: David Shankbone, CC BY 3.0)

Sen. Rand Paul is drawing liberal fire from many left wing commentators, now including Prof. Paul Krugman.  Many of the criticisms are badly off base. As noted in yesterday’s column there is so much simply factually incorrect about The New Republic‘s Danny Vinik recent Rand Paul Has the Most Dangerous Economic Views of Any 2016 Candidate— for example — that one hardly knows where to begin.

Vinik by no means is the only commentator to go into hyperbolic meltdown over Rand Paul. Nobel Prize economics laureate Paul Krugman, recently, in Money Makes Crazy:

Right now, the most obvious manifestation of money madness is Senator Rand Paul’s “Audit the Fed” campaign. Mr. Paul likes to warn that the Fed’s efforts to bolster the economy may lead to hyperinflation; he loves talking about the wheelbarrows of cash that people carted around in Weimar Germany.

Prof. Krugman, a polemicist, characteristically exaggerates. Mr. Paul “likes to warn?” The record demonstrates two brief statements of concern, made in obscure venues, by Dr. Paul. If there are any more they must be obiter dicta in venues even more obscure, showing these “likes” to be far less than a leitmotif of Paul’s rhetoric, much less agenda.

Krugman goes on to indict the Republicans as “monetary crazy” — based mostly on a few stray comments and some utterly irrelevant, outlying, positions such as one derived from Ayn Rand. Few of the positions he cites are any part of the real discourse now ongoing among the center right. Continue Reading