Reviews of The True Gold Standard


The Time is Ripe for Mr. Lehrman's New Book

That's because it goes well beyond making a persuasive case for a return to the gold standard and provides a detailed road map for how to get there. When the time comes for a new U.S. administration and Congress to seriously consider monetary reform—and it will come sooner rather than later if the Fed pursues its current course—Mr. Lehrman's book will serve as a valuable guide.

- George Melloan, former columnist for the Wall Street Journal and author of The Great Money Binge


The True Gold Standard

Buy is a compelling read and a compelling architecture for a way forward.

- Lou Dobbs, Fox Business Network


Lehrman is world class

Lehrman is the most profound monetary thinker of our time. The world monetary system is in a terrible crisis and we live in a world of booms, busts, and debilitating panics. The dollar has lost 82% of its 1971 value and 96% versus gold. Social disorder, wars, and revolution almost always follow such chaos. Lehrman in this book analyzes the disorder and lays out an orderly, practical plan to restore economic growth and create a stable monetary system, exchange rates, and end inflation.

- Barton M. Biggs, author of Wealth War & Wisdom


True Gold Standard -- A Must Read for Policy Makers

Lew Lehrman's most recent book on why we need to adopt a new gold standard comes at just the right time. As the country debates debt reduction and budget policy, he puts on the table one of the most important tools we have to restore economic growth -- at the 4-5% annual level we need. The book makes the constitutional and policy arguments for the gold standard as a means of allowing economic growth that will generate the revenue we need to eliminate deficits and avoid a future debt crisis of our own. Lehrman is a true disciple of the brilliant French professor, Jacques Rueff, who successfully used the gold standard to guide France back from the economic brink after World War I while at the same time avoiding both the inflation and deflation that variously plagued other European countries. Anyone familiar with modern monetary policy and bank regulation in the United States knows we face the same dual perils today.
The book proposes concrete steps to transition the world economies to a true gold standard, as well as spelling out the specific means of establishing it. By addressing the various critiques of the gold standard systematically and convincingly, Lehrman has laid the groundwork for political leaders to take up the proposal. Lew Lehrman has written a tour do force for an idea that must be part of the policy debate of our time.

- Former Congressman David McIntosh, Indiana's 2nd District (1995-2001)


How to Use Gold as Money

Lewis Lehrman has been an ardent promoter of the benefits of the gold standard for over thirty years. He co-chaired Reagan's `U.S. Gold Commission' with Dr. Ron Paul in 1981, and co-authored their Minority Report, `The Case for Gold' in 1982. His new book `The True Gold Standard' (Aug-2011, published by is his latest effort.

I agree with ninety percent of his ideas and plans, all related to how the gold standard is the best type of monetary system because history shows it has always helped produce more liberty, peace, prosperity, morality, and justice. My differences with Lehrman are only the ten percent about how to implement it, as shown in his Implementation Plan starting on page 51.

We agree that commodities got started as money by people as a convenience compared to barter, and that when a commodity IS money; a) The money is equal in market value to the goods or services being exchanged, not just an agreed `symbol' which is scrip. Forming the commodity into coins is just a convenience for recognition and handling, b) There is a natural limit (supply of the commodity) on how much money can be created (compared to the inflationist `out-of-thin-air' system we have today), though there is always `enough', because the commodity APPRECIATES in purchasing power if the economy it serves grows faster than the money supply, and c) For a list of reasons (rare, portable, malleable, divisible, etc.; see the book pages 15, 16), gold has always been chosen by the market (users of money) as the best `medium of exchange' and `store of value' (stable purchasing power over time).

The first `difference' between Lehrman and me appears on his `Summary' text on page i, where he assumes the name `dollar' will continue to be used, and the government will determine the weight of its gold `backing'. I prefer that coins (and redeemable paper notes or metal tokens that represent them) be denominated on their face with the weight and fineness of gold they contain or represent, with no `name' such as `dollar'. This, along with allowing private mints (no license or government `authorization' required), gets the meddling, corrupt, government OUT of the monetary system. Sellers would be encouraged to set prices in weight of gold. Governments like names because it makes it easier to change the `backing'. With weight (milligrams, etc.) as the measure of value, gold is not `backing', it IS money, and thus has no `price' in names like `dollar'. This takes some getting used to!

The second difference is also in the `Summary', on page ii, where Lehrman recommends an international conference to plan the various national conversions to gold-as-money. I fear this could drag-on for years, as our economy fails, with continued watering-down of the rules, and continued government control and abuse. I say it would be better to openly plan in the USA (so other nations could prepare compatible plans as they see fit), then announce a start date (tomorrow?; the reverse of Nixon's abrogation of Bretton Woods in 1971) when all existing Fed Notes would be redeemable in gold, with a requirement to convert them to new gold money within three years, and no new fed Notes (or credit, etc.) created after the announcement. The weight of gold per Fed Note could be calculated by dividing our store of gold (8,100 tonnes?; needs audit) by our money supply (M3?). The amount matters little; whatever it is will be the start of sound money. Prices for goods and services will be adjusted by sellers to reconcile with weight of gold. It should certainly not be related to the current dollar-price of gold, as Lehrman suggests on page 5.

Lehrman wants international negotiations to terminate the current dollar-based reserve currency system. I say this is better invoked by the market. Once the US announces use of gold-as-money, all other nations will have to convert or no seller, or foreign exchange trader, will accept their trash fiat paper. Again, keep the governments out of it. The meddling IMF, BIS, and World Bank will wither and die from lack of support. Bankster-friendly central banks (including our Federal Reserve System) will die or be abolished to the extent nations allow private mints; Good! Once the USA changes to gold, the world market will grab control from the governments and use weight of gold for pricing. As Lehrman proposes on page 8, gold will soon be a world-wide standard, with no exchange rate (except as to weight and purity).

With observation of the above differences, I recommend this book as a good step forward in building support for conversion of the US monetary system to use gold-as-money.

- Dave Redick, Speaker and Author -


The Lehrman Standard

Why the hypertrophy of finance and the microtrophy of enterprise?

Why have 30 percent of the economy's profits during mid 2000s come not from the positive sum benisons of productive investment and entrepreneurial risk, but from the zero-sum-games of speculative investment and fiduciary risk shuffling? Why does public debt, under Parkinson's Corollary, cited by Lewis Lehrman in this book, expand to absorb and stultify all other means of finance?

Why is the government guaranteeing everything--mortgages, deposits, pensions, healthcare, industrial conglomerates, leviathan banks, solar plants, small business loans, waterfront property, corn prices, college tuitions, windmills, kitchen sinks--but not guaranteeing the value of its currency, which since the time of Alexander Hamilton has been its job?

Why is current innovation focused on a confectionary froth of social networking and financial derivatives with scant renovation of other seven layers founded on the physical layer? Why do physicists earn orders of magnitude more in finance than in the physics of entrepreneurial creations?

Could it be, as Lehrman insists in this lambently lucid tract, that the fundamental cause of the crisis is that the monetary system, alone among all capitalist schemes, totally lacks a physical layer?

The remedy for metaphysical money is gold. Critics who say the gold standard has been made obsolete by an information standard based on the Internet do not grasp the essence of information theory, which measures the information content of a message by its "news" (expressed in digital form as unexpected bits or entropy). It takes a low entropy (no surprises) carrier to bear a high entropy (newsworthy or creative) message.

The 130 thousand metric tons of gold available from all time constitute the supreme low entropy carrier for the upside surprises of capitalism. Without guidance from gold, currency markets resemble a communications system without a predictable carrier that enables the information to be distinguished from the noise in the line. Such free floating markets lack any objective means to differentiate the news (change in economic conditions and prices) from the "white noise" of currency flux. The chief sources of new financial wealth in such a world come from exploitation of the potential differences in the gyrations of monetary noise by entrepreneurs of ignorance.

Money is a symbol of productive services rendered. It provides vital information and guidance for entrepreneurs. But it is not in itself a productive service. Unless it has a baseline of gold, entrepreneurship widely degenerates into the manipulation of money for the interests of government profiteers and cronies, which is a cancer of capitalism comparable to the manipulation of law by lawyers in the interests of legal profiteering.

Lehrman tells us how to move step by step from the existing flux of money to a true gold standard. A gold standard can play the role in economics that the Constitution should play in law. As the venerable James Grant beat me into saying (but will have to permit me to repeat), Lehrman is the Alexander Hamilton of our current moment. This tract, short and shocking in its fiery truth, can be read in an hour, but will ring in the consciousness of our time until its message is heeded.

- George Gilder, Editor in Chief of Gilder Technology Report and Chairman of Gilder Publishing, LLC


Recreating the Real Gold Standard

Finished off as it was by the callous executive order of a U.S. president, the gold standard cannot be resurrected the same way. As the political system inches back toward gold-backed money, a road map for getting there is essential.

This is exactly what Lewis E. Lehrman (with whom this writer is professionally associated via American Principles Project and the Lehrman Institute) has provided with The True Gold Standard: A Monetary Reform Plan Without Official Reserve Currencies. Steeped in the experience of Jacques Rueff's handling of postwar France's return to the gold standard and Lehrman's own thinking as a public intellectual, it is a comprehensive yet straightforward plan for cleaning up the global financial system.

As the subtitle suggests, the plan is based on replacing national currencies (the dollar, euro, yen) with the non-national, neutral asset of gold as the world's reserve money supply. Nations would settle international payment deficits and surpluses in gold rather than paper-based currencies. This would have the effect, principally on the U.S. as the issuer of two-thirds of world reserves, of removing the debt overhang which has made trade deficits, government overborrowing, and hot money bubbles the way of life. Depending on whom you asked, the dollar standard was an "exorbitant privilege" (French president Valery Giscard d'Estaing) or an upgrade (Citibank financier Walter Wriston). Decades of financial disorder have now made it clear that it is actually an "insupportable burden" as Lehrman puts it.

Lehrman's historical model is the international gold standard of 1873-1914, an era of industrial breakthrough, global economic growth, and astounding price stability. As charted by his colleague John Muller, it was the most stable period of U.S. monetary regimes based on the Consumer Price Index. Even with price shocks due to technological changes and rapid globalization, prices in the short-term and long-run were more stable than at any other time in American history. This was because of the credibility of the link between the dollar and gold, both for citizens at home and governments abroad.

How do we redevelop this best practice for the 21st century? In some ways, it will be less difficult with the integration of gold into the financial system already through electronic payment systems. On a practical level, using gold as money has never been easier (though financial repression of gold through taxes and regulation still presents a formidable barrier).

On the other hand, the proliferation of credit through new instruments and disintermediation has made the financial system more disorderly than ever. A major portion of credit creation today has been taken over by the shadow banking system, the recipient of the Federal Reserve's bailouts. In addition to a system of unrestricted convertibility between the dollar and gold, Lehrman also outlines banking reform which would insist that financial institutions reestablish their role as fiduciaries through improved liquidity standards using fair market valuation and quarterly stress tests.

And what about the Fed? It does not, as Ron Paul demands, need to be ended as a prerequisite of sound money. But it must be reined in, to which Lehrman has also put much thinking. He mandates particular changes for the central bank, starting with a cease in open market operations.

The Fed would use the discount rate rather than the federal funds market to supply or withdraw credit in response to any imbalance between supply and demand for it. Commercial bills, not government securities, would be discounted and the Fed, like other central banks, would be prohibited from owning sovereign debt (other than short-term revenue anticipation bonds). The asset side of the ledger would consist of gold and liquid, secure non-governmental financial claims. Lehrman calls this Fed policy "scaled to the modest wit of man . . ." and it is a thorough relief from the excess allowed to the central bank today.

The heart of the gold standard has always been the idea of an external, impersonal and automatic discipline on the temptation to manipulate money. The gold standard links the supply of money with its natural demand. It inflation-proofs the central bank and takes away the government's usage of continual deficit financing. It prevents nations from using their own debt to pay for imports and pushes trade relationships into balance. None of this is panacea for the disruptions of capitalism, but they do encourage the kind of free and fair capitalism we say we want. No one has given more of himself to rebuilding a monetary system worthy of that than Lewis Lehrman, and now he's showing us how to get from here to there.

- Rich Danker, Project Director for Economics at American Principles Project

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In Memoriam
Professor Jacques Rueff

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