In Rise of Gold Bugs, History Repeats Itself

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Under a gold standard, the dollar would be valued at a certain number of grams of gold, and the government would be ready to buy or sell gold to anyone based on that value.

The commission’s report was delayed and when finally released called for a continuance of the monetary status quo, albeit with the possible issuance of American gold coins to compete with the South African krugerrand. The platform plank turned out to have no real meaning, and gold bugs were outraged.

The commission, Murray N. Rothbard, a libertarian economist, later complained, was “overwhelmingly packed with lifelong opponents of gold who buried any call for a hard currency.” Ms. Schwartz noted that Treasury Secretary Donald T. Regan, who was the commission’s chairman, and Murray Weidenbaum, a member who was Mr. Reagan’s top economic adviser, “did not tip their hands until the final two meetings of the commission.”

Mr. Gingrich did send a signal that his commission would be different. He said the co-chairmen would be Lewis Lehrman, the author of a recent book titled “The True Gold Standard,” and James Grant, the editor of Grant’s Interest Rate Observer.

“The fundamental conclusions of a Lehrman-Grant commission to consider a gold standard may be foregone: We’re for it,” Mr. Grant wrote in the latest issue of his publication.

Mr. Lehrman, in fact, was one of the two dissenters to the Reagan commission report. The other dissenter was a Texas congressman named Ron Paul.

More than almost any other dispute in economics, gold often seems to be a matter of theology. To supporters, gold has been money for thousands of years, and a return to it is the only way to keep politicians from debasing currencies. To most current economists, gold is a commodity, subject to the normal fluctuations of supply and demand. To them, the supply of money should be controlled based on economic principles. With a gold standard, the amount of gold available to back money could grow only at the same rate that gold stocks increased, something that depends on mining successes, not on the needs of an economy.

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