Some things don’t change. For centuries, for example, people have been painting still life – flowers, fruit, some food on a platter with a dead rabbit on the side. Even Picasso tried his hand at it. “Still lifes,” however, are often a metaphor for stagnation.
But just maybe, life is stirring abroad.
A restaurant at Walt Disney World has begun to serve alcoholic beverages. What is Mickey Mouse thinking? The Russian army has decided to let its soldiers wear socks instead of the centuries-old “portayanki” that they wrapped around their feet for centuries. And the Cuban government has decided to discontinue exit visas for its citizens.
What is the world coming to? Japan, for example, is considering phasing out nuclear power. In France the Greens want to phase out nuclear power completely but have agreed with Socialists to slower, more limited goals.
The world does not move quickly, however – even when the danger is clear. Psychologically, much less economically, doing something different is scarey. It is more comforting to do more of the same even if it isn’t working than do something different that might work better.
Too often, politics trumps policy. When politics confront policy – as it did in a 1971 when Nixon closed the gold window– is it any wonder that policy will suffer? We desperately need economic policies that embrace both change and choice.
William Jennings Bryan, famously not a fan of the gold standard, once said: “Destiny is not a matter of chance, it is a matter of choice; it is not a thing to be waited for, it is a thing to be achieved.” Bryan never tired of making a comeback for himself and his anti-gold policies; he ran three times for president.
Today’s economic conditions reflect a fiat monetary system held together by many tricks and luck over the past 40 years. The world has been awash in paper money since removal of the last vestige of the gold standard by Richard Nixon when he buried the Bretton Woods agreement — the gold exchange standard — on August 15, 1971.
Since then we’ve been on a worldwide paper dollar standard. Quite possibly we are seeing the beginning of the end of that system. If so, tough times are ahead for the United States and the world economy.
The new Federal Reserve chairman, Janet Yellen, gave a policy speech today at Chicago, where, in a startling gesture, she mentioned three working individuals by name — Jermaine Brownlee, Vicki Lira, and Doreen Poole. They lost their jobs the Great Recession and have been struggling ever since. It was a refreshing, even affecting demarche by Mrs. Yellen, who has made a return to full employment a public priority. She underscored her sincerity by telephoning Mr. Brownlee and Ms. Lira and Ms. Poole before delivering her speech.
Publisher's Note: Originally released in June/July of 1991, this detailed report discusses Jacques Rueff's economic theories and applies them to modern economic events.
By John D. Mueller
Who Was Jacques Rueff?
... Trained in science and mathematics at the Ecole Polytechnique, Rueff devoted his first theoretical work to showing that the same scientific method applies to “moral” or “social” sciences like economics as to the physical sciences (Des Sciences Physiques aux Sciences Morales, 1922). In both cases, he pointed out, individual acts can be “indeterminate,” but the pattern of large numbers of individual acts can be predicted as a matter of probability. And so in economics no less than physics, as he later wrote, “A scientific theory is considered correct only if it makes forecasting possible.”
"Forerunners of man lived upon the planet several million years ago. But the unique, modern, social order of man – civilization – emerged only four to five thousand years ago. Historical and archaeological evidence suggests that the institution of money evolved coterminously with civilization. From the standpoint of the 100,000-year history of Homo sapiens, civilization and money are but young and fragile reeds. Today their very existence is threatened by financial disorder."
There is a lot of bad behavior in the global political and monetary world. Much of it comes in countries that should know better. Recep Tayyip Erdogan’s Justice and Development Party (AKP) easily won municipal electons in Turkey but the party’s candidates won far short of the nation’s votes.
Hostility toward gold has a long pedigree.
19th century depiction of Pliny the Elder courtesy of the Library of Congress
Gaius Plinius Secundus, commonly known as Pliny the Elder, in his The Natural History, Book 33, section 3, writes:
Would that gold could have been banished for ever from the earth, accursed by...