RSS Feed MenuMy CNN.com column today reminds the Ron Paul enthusiasts at CPAC why the United States left the gold standard in the first place.
Imagine now if the gold standard were in operation today. The federal government would be scrambling to balance its budget in the midst of recession, cutting spending and raising taxes. Instead of pumping money into the economy, the Federal Reserve would be sucking money out. Priority 1 would not be creating and saving jobs, but preserving the nation’s gold hoard.
Instead of living through the nastiest recession since the war, we’d be deep into a second Great Depression.
Click here to read the rest.
sinz54 // Feb 22, 2010 at 9:41 am
You’re being unfair to Ron Paul and the libertarians.
Even though I disagree with them, they acknowledge the scenario you talk about: The Fed during a depression, unable to reflate the economy due to the gold standard.
BUT Ron Paul also advocates doing away with the Fed. His argument is that the Fed, by encouraging loose money during the 1920s, made a sharp crash inevitable. If the U.S. had pursued tighter money during the 1920s, it would have been a bust decade but the Great Depression wouldn’t have happened.
There’s some value to this; the bust of 2008 was partly caused by the Fed encouraging rampant speculation with loose money.
So what Ron Paul really wants to do is go back to the 19th century. Then we had depressions, but none so big as the one we had in the 1930s. We recovered from all the depressions of the 19th century without any FDR type New Deals.
kensilber // Feb 22, 2010 at 10:10 am
The 19th century had the longest consecutive depression on record (1873-9); Great Depression by contrast was 1929-1933 followed by growth and late 30s downturn. We don’t have good basis for saying 19th century depression less severe than Great Depression; statistics sketchy, but in any event it’s clear they were very severe as well as frequent. I wrote about it at http://www.researchmag.com/Issues/2010/January-1-2010/Pages/The-Tumultuous-19th-Century.aspx.
RavinLunarTick // Feb 22, 2010 at 10:48 am
Part of the problem really was the availability of gold. My guess is that Ft. Knox had already been looted by the big boys and the gold wasn’t available. Of course the economy tanked. The assets of the Country had been literally stolen from under our noses, and now, the Banksters are doing it again. Tying the dollar to a commodity makes a lot of sense. When inflation drives the price of the commodity up, the dollar and its purchasing power goes with it. It might make more sense to tie the dollar to a metal that is commonly available that is widely used by society, like aluminum or copper, or even tied to a price of a combination of metals so that when normal market conditions of supply and demand have an impact on the price of one metal, the other metals act as a buffer. Inflation is a tool used by the very wealthy to relieve the rest of us of our assets. It is manipulation and amounts to a shell game designed to sucker us.
We need to recognize that Capitalism and Socialism in their purest forms are ultimately dangerous to the people. At either extreme, a tiny few live very well and the rest of us are in survival mode. We also need to recognize that Facism is a marriage of convenience between big corporate interests and big government, each using the other to remove or contain competing interests. In reality, that is the form of government that we now have in the United States and we absolutely must muster up the backbone to deal with that fact and regain control. The Fed is controlled by powerful banking interests, by their very nature concerned with profit and the maintenance of power; king of the mountain if you will. Profit is not a dirty word, but too many people are willing sacrifice long-term profit for short term gains. Other factors such as quality of life, environment, responsibility, and the like need to come into play. Politicians can’t be trusted either but in the end, they are subject to the will of the people. Utimately, I trust the will of the people over the will of the corporations.
I think that at the very least, the Fed should be audited, Ft. Knox should be audited, and the true facts of our assets known to all of us. I think the government should get back into the business of providing the money supply and making sure that it gets out into the economy before the Banksters get their greedy little mitts on it. The Republicans and their cronies forked over billions to Wall Street buddies when prudent investing became addictive gambling, and when they took the helm, the Democrats didn’t have the backbone or political will to stop it, so now, nearly a trillion dollars of our money has vanished into a black hole, the banks are sitting on it while our small businesses are starving for capital as our jobs and our assets go to overseas. Adding insult to injury, those same bankers are digging into that money that the taxpayers so generously provided and forking over huge bonuses to their top management. That’s OUR MONEY people! This is NOT right!
Our Constitution was designed by people who had a very good understanding of human nature. It was designed to foster free and fair enterprise, and a legitament role of government is to determine and enforce fairness; fairness to employees, employers, consumers, manufacturers, investors alike. It is not in the nature of Capitalism, Fascism, or Socialism to put a high value on fairness and we need to remember that fact.
CommonCents // Feb 22, 2010 at 12:15 pm
Study your history and discover what caused the depression. Then rewrite what you wrote from an informed position. Ron Paul knows what it will take to become a great country again, your conclusions take us to a long slow hard crash and a forever weak position.
I’d rather take my medicine and cure the patient then give it another disease hoping for a miracle.
CommonCents // Feb 22, 2010 at 12:24 pm
The longer more severe 19th century depression were caused by the same conditions as the 1930’s depression and our current depression. The Continental dollar failed and hyper-inflated and then after that independent banks were then allowed to print their own currency and another resulting hyperinflation.
The 1930’s we tried to allow free market forces to deflate the roaring 20’s bubble economy and bank thievery but the agony was prolonged by Federal government intervention. Only after WWII when we were the only industrial giant left standing did we truly recover.
We will never be in that position again, letting the failures fail, following a constitutional government and sound money will at least get us back on the right track. Otherwise, until we totally collapse will the proper changes be demanded.
cheves222 // Feb 22, 2010 at 1:31 pm
David, I appreciate what you are trying to do here, I really do, but it’s a lost cause with the Ron Paul crowd. With their minds (and more importantly, their hearts) unhinged from reality, your deft arguments fall flat.
Better to devote your energies to the more reasonable Tea Partiers who would be open to your “small government that actually functions properly” ideas.
Just sayin’.
dragonlady // Feb 22, 2010 at 1:51 pm
Get over it libertarians. We’re not going back to the gold standard and we’re not abolishing the Fed.
dendup // Feb 22, 2010 at 6:06 pm
What I find really interesting here is that, for example, David feels compelled to refute Ron Paul’s idea in a general audience forum such as CNN, and that Ron Paul will be on Morning Joe tomorrow.
Not just the MSM, but also Fox pretty much ignored him in the 08 Rep primary season. There’s more going on here than just winning the CPAC straw poll. I think his moment has arrived.
The Reps hope to co-opt the Tea Party, but there really is no co-opting Paul. He may end up making Ralph Nader look like Mr. Cooperation.
shithead48 // Feb 22, 2010 at 9:25 pm
Mr. Frum,
It is true that Ron Paul has advocated the return to the gold standard. However, right now, he’d simply like Americans and congressman/senators to view the inner workings of the federal reserve via an audit. Don’t marginalize Paul. Get real man… don’t be partisan, don’t be partial, just don’t write stories that minimize politicians that are overall more honest and constitutional than 90% of other politicians. You could argue that Barry Goldwater started the “revolution” (but then you could argue adam smith did as well…) but Ron Paul has revitalized it. That is undebatable. If you are a true conservative, you would choose Ron Paul on a ballot if the other names on the ballot were of the type we know to not be true conservatives.
kevin47 // Feb 22, 2010 at 10:20 pm
“David, I appreciate what you are trying to do here, I really do, but it’s a lost cause with the Ron Paul crowd. With their minds (and more importantly, their hearts) unhinged from reality, your deft arguments fall flat.”
I agree with David’s conclusions, but his argument is woefully lacking. To be honest, I have a hard time making the argument he is trying to make. There are very compelling reasons why we ought to have remained on the gold standard, and why we ought to consider returning to it. They deserve responses that are better than the “once we abandoned the gold standard, the whole economy became better, of a sudden” meme.
By my lights, national security and the gold standard are incompatible. The argument starts there.
BoolaBoola // Feb 23, 2010 at 1:07 am
It seems like a non-issue to me. The price of gold is too volatile to support a currency. This is true of all precious metals.
Paleoconservative // Feb 24, 2010 at 6:38 am
Richard Perle, Paul Wolfowitz, Michael Ledeen, Irving Kristol, Charles Krauthammer, Elliot Abrams, David Wurmser, Larry Franklin, Douglas Feith, Albert Wolhstetter, Leo Strauss, John McCain, Joe Lieberman, Ben Bernanke, Sean Hannity, Glenn Beck, William Safire, Dick Cheney, Jeane Kirkpatrick, Patrick Moynihan, Henry Scoop Jackson.
All roads lead to Israel.
“Whose War?” By Pat Buchanan
“Sharon’s War” By Robert Novak
1997: “A Clean Break: A New Strategy For Securing the Realm”
1992: Defense Planning Guidance
Remember the USS Liberty.
AMERICA FIRST