The True Gold Standard (Second Edition)
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?
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.”
It’s time for a gold standard comeback.
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...
Oct 05, 2012
Key Monetary Writings
Barry Eichengreen (2011) writes: Under a true gold standard, moreover, the Fed would have little ability to act as a lender...
Why the Gold Standard?