On Wednesday, the world woke up to the Drudge Report featuring, as its banner headline, Steve Forbes, the CEO, editor, and former presidential candidate, predicting a U.S. gold standard within five years. And as liberal blogger Mike Konczal wrote last month: “Conservatives are . . . rallying around the gold standard wing of their party.”
Conservatives (among others) who are sickened by high unemployment and a runaway federal government should cheer the growing support for restoring the gold standard. But what’s behind the groundswell of support for the gold standard, and what does it mean?
The rally began last year when two groups (with which I am professionally associated) — American Principles Project and American Principles in Action — began promoting the gold standard. When joined by the Lehrman Institute’s web-based The Gold Standard Now (with which I am also professionally associated), the momentum grew notably stronger.
APP chairman Sean Fieler and APP policy director Jeffrey Bell appeared on The Wall Street Journal’s opinion page and elsewhere (as did APP advisor Charles Kadlec) making the case for gold. Conservative icon Lewis E. Lehrman, one of the two pro-gold members of the Reagan Gold Commission, also appeared, for the first time in decades, in The Wall Street Journal to argue the case for gold. That article was picked up by 4,000 other sites, and The Weekly Standard’s William Kristol responded by praising the gold standard on his blog.
The immensely respected Dr. Judy Shelton took leadership of the Atlas Economic Research Foundation’s Sound Money Project. And the Manhattan Institute held a major event articulating the developing conservative consensus for the gold standard. The Tea Party Patriots conducted a full breakout session on the gold standard at their first American Summit. The Iowa Tea Party, in concert with APIA, is launching a statewide bus tour with the gold standard prominent on the agenda. Reagan official David Stockman and journalist James Grant recently drew almost 1,000 listeners to hear them advocate the gold standard in New York City. Stockman’s remarks proved riveting.
Many people hadn’t heard much about the return, in force and fury, of the gold standard proponents until Drudge nailed it. What the heck is it? Why does it matter?
The gold standard is the unfinished part of Reagan’s (and Kemp’s) economic growth agenda. Abundant empirical data demonstrates that the gold standard holds the key to recharging economic growth. America’s economic growth has been punk for over a decade, barely more than 2% annually.
That’s dead stagnant! With a strong dollar — the gold standard — economic growth would resume at a more normal 3% pace. It could even give us 4%. Compounded over a decade, the economy would be on a fast-growth path. This would go a long way towards solving the deficit crisis and even the entitlements crisis. And it would create 20 million jobs.
As Ike Brannon astutely noted in The Daily Caller last week:
The primacy of economic growth in generating tax revenue cannot be overstated: the fastest post-war increases in tax revenue growth occurred in 1997-2000 and 2004-2007, when revenues went up by nearly 50% in each instance. Tax rates did not go up at all during that time — the rapid increase in revenue occurred because we were in a sustained period of strong economic growth.
While the gold standard sounds like an antique, it isn’t. It’s based on a simple idea: defining the dollar as a weight of gold. When my father was a young man, he could walk into any bank with a $20 bill and get a $20 one-ounce gold coin. When I was a young man, I could walk into any bank and exchange a dollar bill for a silver dollar. We didn’t use metal money to buy groceries or gas or anything else. But the legal right to exchange currency for gold made the currency hold its value.
Under the gold standard, we still will use credit cards, ATMs, cash, checks and online transfers. The gold standard is invisible. But under it, the dollar will hold its value rather than chronically decaying. When President Nixon took us off the gold standard (40 years ago in August), he promised that the dollar would hold its value. Instead, a 2011 dollar is worth less than one-fifth of 1971’s.
Inconvertible paper money decays, invariably, tanking the economy. Gold convertible money holds its value and promotes solid growth. It doesn’t look much different but it works. If the GOP is to refurbish its brand — after many Republican years, since Reagan, of economic stagnation — it must generate jobs and economic growth. The surest — the only sure — way to get there is to finish the Reagan policy agenda and restore the legal convertibility of our currency into gold. Gold is the authentic Path to Prosperity.
Ralph Benko, a member of the Tea Party Patriots, is the author of The Websters’ Dictionary: How to Use the Web to Transform the World and an advisor to The American Principles Project.