Sometimes you just don’t know where to begin. The discussion on the viability and probability of a gold standard is full of holes on both sides, along with false innuendoes, bad economics, historical redaction and just plain poor reasoning.
Now we learn that the Republican Party is setting up a commission to examine the viability of returning to some sort of gold standard. This isn’t the first time such a move has taken place. Reagan assigned a Gold Commission in ’81. And, though I hate to admit it, I would expect this committee to be equally as successful.
In the early 80s we were coming out of a tremendous inflationary decade. The realization that the fiat dollars weren’t working had come to the fore. However, political interests won out over economic responsibility and the committee ended up on the side of the promissory note.
Much of the problem is that most economists today have been indoctrinated to Keynesianism. When it comes to monetary policies, they only know how to think in terms of manipulation. The age-old forces of supply and demand that are the keystone to a free market are cast to the side in favor of imposed supply in an effort to control demand.
And the amount of disinformation rampant among gold standard detractors is staggering. For instance, consider this quote from Geneva economics’ professor, Charles Wyplosz.
There has been no significant inflation in the advanced economies for the last 25 years, so the need for gold to defeat inflation seems unnecessary.
Really? In the past 25 years there’s been no significant deflation? All it takes is a simple moment of reflection to realize that this is one of the most erroneous statements he could have made. People actually read this stuff and just gloss over it, as though it’s veritable information. But it’s an outright fabrication. He’s either lying, or simply bases his assumption on some sort of idea that we’ve maintained a 2% inflation rate for the last quarter-century.
A simple inflation calculator, using the same CPI that is commonly used (and that shows much lower inflation than the previous formula), will answer this for us rather quickly. How much do you think it would take in 2012 dollars to equal $100 in 1987?
Now, perhaps Professor Wyplosz considers the erosion of 50% of one’s capital to be considered as “no significant inflation.” From our perspective, we should be able to hide our cash in a mattress in 1990 so that we can use it in the event of an emergency in 2025. Now THAT’S a stable currency. But the disintegration of 50% of its value over 25 years is a disaster. Could you imagine if a company had books that reflected that? How long would they stay in business? But economic experts tout this as insignificant?
This is what a gold standard is up against. The only way to compete with this is for the truth to be unleashed. We’re doing what we can here to help readers understand. But our voices aren’t nearly as loud as mainstream economists and media.
For readers to truly grasp the significance of this and have a voice, serious self-education needs to take place. The fact that you’re reading this far means you’re discerning and desire to learn. But most Americans simply want to go about their daily lives relying on the status quo. It’s good enough for them today, so why rock the boat?
The question I have for such thinking is, “What about your children?” We’ve been handed a pile of dung. We can either use it for fertilizer by burying it in the ground and starting over. Or, we can just keep on keeping on and let the next generation deal with it. Whatever happens, someone will have to deal with it. The pain today would be great. But if we’re willing to endure it, it’ll be much less than what the next generation will endure if we continue to do nothing.
As an individual the task regarding our economy seems daunting. But, regardless of what happens on a national level, you can start thinking in terms of a personal gold standard. By doing so you can protect your wealth.
Incidentally, an ounce of gold stuffed in a mattress in 1987 would be worth about twice as much today as it was then. Think about it.
For your prosperity,
J. Keith Johnson
The Gold Informant