The True Gold Standard (Second Edition)
In his memoirs, President Ronald Reagan (Feb. 6, 1911-June 5, 2004) recalled, "To get the spending and tax cuts we wanted through Congress, we needed the help of a substantial number of Democrats in the House as well as the votes of nearly all the Republicans in both houses of Congress."
Despite deep partisan divisions, Reagan won majorities of Republicans, Independents and "Reagan Democrats" by heeding James Madison's observation in Federalist No. 10 that "the most common and durable source of factions is the various and unequal distribution of property." (Madison defined 'property' broadly to include what's now called 'human capital.')
Voter party self-identification shadows the shares of family income received as gross labor or property income (chart below). This is why treating labor and property income roughly equally—e.g. cutting marginal income-tax rates "across-the-board" in 1981 and 1986 and rebalancing pay-as-you-go Social Security retirement pensions in 1983—was the glue in Reagan's winning coalition. Fiscal policy has been a losing issue for GOP presidential candidates since.
The next successful president—including success in reforming monetary policy—will readopt Reagan’s winning fiscal strategy.
The Federal Reserve System's James Narron and David Skeie, career officials with the Federal Reserve System, are two eminent historically erudite figures. Writing in the New York Federal Reserve Bank's online publication, Liberty Street Economics, they recently provided a continuation of their valuable historical "revue," Crisis Chronicles: The Collapse of the...
Jul 14, 2014
On July 6th, Nobel economics laureate and Princeton Professor launched, in the New York Times, one of his occasional polemics, entitled Conservative Delusions About Inflation, against proponents of the gold standard. Krugman Caricature under creative commons license from DonkeyHotey As usual, Prof. Krugman is, conveniently for the position he takes, beyond lopsided...
Jul 23, 2014
An article headline in Saturday’s Wall Street Journalread “Rate Talk Heats Up Within The Fed.” As Journalreporters Jon Hilsenrath and Michael Derby...
Why the Gold Standard?