The vast majority of such audiences view the GOP gold standard study committee proposal not as some kind of farewell tribute to retiring Rep. Ron Paul and his efforts to educate the masses about “honest” money but more like a done-deal and are expecting to have the greenback pegged to gold sooner rather than later (provided, of course that Messrs. Romney and Ryan prevail in November’s elections). This writer has spent several hours reading the emotionally-laden conversations on such sites by folks who are convinced that a ‘second coming’ is at hand for gold in America. At any price. Literally and figuratively.
Unfortunately, it appears that the participants in these numerous — and mainly gold-bullish by virtue of extrapolation — discussions have not spent any time reading the veritable explosion of media articles, op-eds, commentaries, etc. that have sprung up on the subject matter during the past 72 hours. In fact, we have rarely, if ever, seen such an immediate and widespread response to an idea (politically-motivated or not) as we have just witnessed with this GOP proposition.
Evidently, when it comes to the possible reestablishment of a gold standard, there are just as many voices that wish to be heard as being in opposition to it. Here now, is the roundup of such statements, in no particular order. We dedicate the remainder of today’s commentary to them not because sound money is a bad idea (it never was) but because what the proponents of this particular set of measures are advocating bears very close scrutiny by all of us who are not in possession of the credentials of the folks who wrote and/or spoke the following observations:
- Reuters News cited Capital Economics analysts as opining that “it is hard to conceive of the circumstances under which no one would want to hold dollars” in the event the full backing of US debt leads to instant $10,000 per ounce gold. The news agency also cited the World Gold Council, which noted that such a revival of the Tea Party’s favorite metal is “unlikely.”
- NY Times columnist and Nobel Prize-winning economist Paul Krugman remarked that “returning to the gold standard is an almost comically (and cosmically) bad idea. Mr. Krugman points to a chart that reveals that, since 1968, gold’s so-called “stable purchasing power” has been anything but stable. Rep. Ron Paul has his followers all but convinced that the gold standard is the key to stable prices.
- The Atlantic’s Matthew O’Brien calls the gold standard the “world’s worst economic idea” and uses only two charts to drive that point home; one showing CPI inflation under the gold standard from 1919 to 1933, and the other depicting CPI inflation since the Fed’s QEs have been with us. Mr. O’Brien remarks that in the period since the Fed began quantitative easing, there has been 23 times less variance in prices than there was under the gold standard. The tally of economists wishing to bring back gold backing for the US dollar was…zero during a recent poll.
- NYU professor “Dr. Doom” Nouriel Roubini tweeted on Friday last week that “Republicans eye return to gold standard & to another Great Depression as the gold standard contributed to the first one.”
- Law professor and best-selling author Susan Estrich says of the GOP’s “extremist” platform that includes the gold standard and audit the Fed propositions that it is one that does not reflect the candidate’s views and that it is thus a sign of weakness. Ms. Estrich notes that the passage of a platform that “throws federalism to the wind, forces rape and incest victims into maternity wards, and reads like a complete pucker-up to libertarian Ron Paul rather than the Wall Street-savvy nominee” indicates that Mr. Romney was not strong enough to stand up to the ideologues, or that he did not dare try.