By Ralph Benko
Excerpt from The National Pulse:
Recently, two of The Huffington Post’s political reporters, Eliot Nelson and Jeffrey Young (who have managed to fuse ridicule and journalism into something functionally indistinguishable from “Alternative Facts”) recently made a telling observation. Their characteristic facetiousness may obscure a brilliant intuition. They observed: “we give it a month until Trump calls for the gold standard to be reinstated because he likes the sound of it.”
As I have previously written, gold has a profound appeal for Donald Trump:
Bloomberg View‘s Timothy L. O’Brien recently provided a colorful and insightful feature entitled “Donald Trump Loves Gold and Don’t You Forget It.”
Therein O’Brien provides an opulently illustrated, lengthy litany of the many, many gold-themed elements to Donald Trump’s campaign and life….
President Trump’s intuitive appreciation of gold is not merely aesthetic. As I observed at Forbes.com in a column headlined “Donald Trump, The Gold Standard, Maynard Keynes, And Our Madmen In Authority“:
As Keynes wrote in his General Theory of Unemployment, Interest, and Money (chapter 24, part V):
“Practical men, who believe themselves to be quite exempt from any intellectual influences, are usually the slaves of some defunct economist. Madmen in authority, who hear voices in the air, are distilling their frenzy from some academic scribbler of a few years back.”
Keynes was a supremely practical man. One infers he is spinning in his grave over his absurd status as the prevailing defunct economist enslaving practical men and as the academic scribbler from who our latest madmen in authority are distilling their frenzy.
In his 1923 Tract on Monetary Reform, Keynes famously called the gold standard a “barbarous relic.” What is less generally appreciated is that he was referring to the “interwar gold standard,” not the real deal classical gold standard. The “interwar gold standard” now is universally understood to have been a mere façade. It preserved the name of the gold standard but violated its fundamental “rules of the game.” Think baseball without balls and strikes.
The “interwar gold standard” in fact was a barbarous relic. It very likely was the main cause of the Great Depression.
The classical gold standard had closed shop in August 1914 and was innocent of causing the Depression. FDR in no way took America off the gold standard.
[…]
Michelle Jamrisko, a reporter for Bloomberg News, was among the first to notice this. Last month she reported Make America Gold Again: Calls for Everyone’s Favorite Standard Are Back Again. Jamrisko astutely reported that Donald Trump, the presumptive Republican presidential nominee, and Ted Cruz, the runner up, expressed sympathy for, or actually campaigned on, the gold standard:
Ted Cruz, in one of the early candidate debates last year, said the Fed “should get out of the business of trying to juice our economy and simply be focused on sound money and monetary stability, ideally tied to gold.”
[…]
Then there was Donald Trump. “We used to have a very, very solid country because it was based on a gold standard,” he told WMUR television in New Hampshire in March last year. But he said it would be tough to bring it back because “we don’t have the gold. Other places have the gold.”
One also well might take note of Trump’s comment 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.
Trump’s intuitive appreciation of gold is fully supported by history. Liaquat Ahamed’s Pulitzer Prize-winning Lords of Finance recounts, from FDR’s “first hundred days”:
The string of measures was a strange mixture of well-meaning steps at social reform, half-baked schemes for quasi-socialist industrial planning, regulation to protect consumers, welfare programs to help the hardest hit, government support for the cartelization of industry, higher wages for some, lower wages for others, on the one hand government pump priming, on the other public economy. Few elements were well thought out, some were contradictory, large parts were ineffectual. While much of the legislation was very laudable, aimed as it was at improving social justice and bringing a modicum of economic security to people who had none, it had little to do with boosting the economy. Tucked away, however, in this whole motley baggage, as a last-minute amendment to the Agricultural Adjustment Act, was one step that succeeded beyond anyone’s wildest expectations in getting the economy moving again. This was the temporary abandonment of the gold standard and the devaluation of the dollar.
The only quibble here is that FDR did not abandon the gold standard, even temporarily. He merely, under the shrewd guidance of economist George Warren, the leading commodities price expert of his day, revalued the dollar from $20.67/oz to $35/oz to adjust it to the post-war increase in commodities prices.
Read more at The National Pulse
Photo Credit: Jeffrey