The Republican Party Platform’s call for the creation of a commission to evaluate restoring the link between the dollar and gold may prove to be the biggest upside surprise of the 2012 Presidential contest. If successful, a serious effort to chart a responsible path toward making the dollar as good as gold would provide the linchpin to restoring economic growth, low unemployment, entitlement reform and, as a consequence, balance to the federal budget.
Yet, reaction to the gold plank in the proposed Republican Party Platform has been greeted by the predictable hostility of the “experts” whose comments the press dutifully reports. What has gone largely unreported are ten reasons the American people should support the creation of a “gold commission.”
1) A gold standard is key to achieving a period of sustained, 4% real economic growth.
The U.S. dollar was created as a defined weight of gold and silver in 1792. As detailed in the booklet, The 21st Century Gold Standard (available free at http://agoldenage.com), I co-authored with fellow Forbes.com columnist Ralph Benko, a dollar as good as gold endured until 1971 with the relatively brief exceptions of the War of 1812, the Civil War and Reconstruction, and 1933, the year President Franklin Roosevelt suspended dollar/gold convertibility until January 31, 1934 when the dollar/gold link was re-established at $35 an ounce, a 40% devaluation from the prior $20.67 an ounce. Over that entire 179 years, the U.S. economy grew at a 3.9% average annual rate, including all of the panics, wars, industrialization and a myriad other events. During the post World War II Bretton Woods gold standard, the U.S. economy also grew on average 4% a year.
By contrast, during the 40-years since going off gold, U.S. economic growth has averaged an anemic 2.8% a year. The only 40-year periods in which the economic growth was slower were those ending in the Great Depression, from 1930 to 1940.