An Exclusive Interview with the Hon. Steve Lonegan, Part 3

Steve Lonegan, former mayor of Bogota, New Jersey, and nominee for US Senate, is the Director of Monetary Policy for American Principles in Action, the leading advocacy group for the classical gold standard in Washington, DC.  Steve formerly was a top state director for Americans for Prosperity.

Hon. Steve Lonegan

On September 3, 2014, he launched -- also at Facebook -- at a debut event near Wall Street and hard by the grave of Alexander Hamilton (and his beloved wife, Eliza), featuring gold standard proponent Steve Forbes, Chairman and Editor-in-Chief of Forbes Media, previously interviewed here. is pleased to present this exclusive interview.  This is the third of three parts.

Q: The conventional wisdom among economists is that the gold standard caused the Great Depression.    What do you say to that?

A: I certainly cannot put this ill guided concept in the realm of “wisdom.”

This hallucination denies the fact that the Depression occurred only 13 years after the establishment of the Fed. There are several factors that led to the collapse of Wall Street, not least of which points to the rather loose money policies of the Fed at the time that allowed low cost margin buying, destructive foreign trade tariffs and a prolonged depression that was caused by the ill-conceived policies of Franklin Roosevelt.

The gold standard did not cause the Great Depression but its reputation certainly was a victim of the debacle. Economists who blame the gold standard are engaging in propaganda designed to shore up the, print on demand, non-redeemable paper ticket “Federal Reserve Notes” of the Fed.

Q:  Winston Churchill, while he was Britain's Chancellor of the Exchequer in 1925, by restoring the gold standard at the pre-World War I price, precipitated a sharp recession, throwing almost one million people out of work, which led to the General Strike of 1926.  He considered this the greatest blunder of his career.  How can the world avoid a comparable blunder?

A: Churchill arbitrarily set the price of gold too high, driving up interest rates and tightening the money supply at a particularly bad moment in history. A time when affordable credit and adequate money was needed to rebuild Europe. This could have been avoided by allowing the market to establish the value of gold at a future date certain a date a year later or so when the market would have settled on the appropriate valuation. Had Churchill followed this model he would have been successful.

Q:  The Bank of England published a study in 2011 assessing the Federal Reserve Note Standard against both the Bretton Woods gold-exchange standard and the classical gold standard and found that it performed substantially worse than either.  Are you familiar with this Financial Stability Paper No. 13?  If so, what lessons do you draw from it?

A: Yes I am and every member of Congress should read this report. The lesson is simple and clear as day: money maintained its value far better under the gold standard then without. Economic growth was substantially more equitable and stronger with the gold standard.

This is not just in this country but has impacted the entire world.

Q:  Why are academic economists and elite policy makers so aloof, or even hostile, toward gold?

A:  Because they tend to be misguided elite academics that fall into the trap of fatal conceit, believing they can control the economy through their policies driven by “scientific data.” The data they ignore is human action; the millions of transactions people make every minute that are determined by individual needs.

Like the Soviets trying to set how many shoes should be manufactured, how many loaves of bread to bake or how many cars to produce, this is the same category of central planning.

They are destined to failure, just like Soviet central Planners failed. I am not calling these economists Soviets. They are probably well meaning and believe in what they are doing.  They just are dead wrong because they ignore the most important force in the economy: people tend to act in their own best interests.

Q:  What were the views of the Founders of America on gold?  After all, they had lived through the hyperinflation of the paper Continental dollar.  Is there a Constitutional aspect to this?

A: The founders despised paper money. The Continental Dollar collapsed. Jefferson and Washington had both suffered significant looses as a result of the collapse of Continental Congress's paper money. The founder’s hated paper money so much they established
Article  1, Section 8 of the United States Constitution that states "Congress shall have the power…to coin money, regulate the value thereof,” and eliminated the draft clause giving Congress the power to "emit bills," meaning to print inconvertible paper money such as Federal Reserve Notes.

Congress has abdicated its responsibility.

Q:  You are joining in a small but very distinguished group of principal gold standard advocates, people like businessman-scholar and Reagan Gold Commissioner Lewis E. Lehrman, former Representative (and subcommittee chairman, also Reagan Gold Commissioner) Ron Paul, Media titan Steve Forbes, financier-philanthropist Sean Fieler, and Prof. Larry White, among others.  Would you take a moment to reflect on some of your colleagues?

A: These are brilliant men, all successful in their own right and all insightful enough to foresee just how important this issue is for America.

These men have seen the danger and have sounded the alarm.   For our republic to survive--and prosper--it is necessary for more of us to dedicate some part of our time and resources to being an engaged citizen. These men have taken that challenge to a new level in getting out ahead of this critical issue. They are providing the intellectual and academic firepower needed to influence opinion leaders and change the course of history.  My job is to build the ground game. To drive the ball down the field -- "four yards and a cloud of dust." I am honored to be able to work with these distinguished leaders.




Kathleen M. Packard, Publisher
Ralph J. Benko, Editor

In Memoriam
Professor Jacques Rueff

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