The True Gold Standard (Second Edition)
Key Writings: Benko on the Gold Standard
The justification for Big Government is entirely gone. This sentiment is not limited to the right, the Tea Party, or the left, the Occupy movement. It is across the board. It is existential, rather than ideological.
Our nice big government won the war. Well done. Mission accomplished. Now we want our power — to direct the government — back. We want our money — yes, trillions — back. And since much of it’s spent… stop taxing, borrowing and printing.
No, really. We insist.
It’s time, for example, to restore the classical gold standard. The gold standard, which is the gold standard of monetary integrity, always is an early casualty of big war. But it is a fundamental building block of a Golden Age.
“The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.”
– Ernest Hemingway, Notes on the Next War: A Serious Topical Letter
The transition from total war to world peace will go a lot faster if you, dear reader, recognize and own your own power. Own it and participate.
We — including you — created the Big Government for very good reasons. Now, for very good reasons, we are going to dismantle it. (It won’t dismantle itself. And yes, the empire is sure to strike back. But advantage: rebel alliance.)
Peace, to be sure, is provisional. Its prospect is not guaranteed. Yet the tilt of the terms of engagement now is in liberal republicanism’s favor and against Big Government. Peace favors liberal republicanism.
For the first time in a century, the deck is stacked in favor of liberty. Do help it along. As Roger Mexico memorably declares, in Thomas Pynchon’s tour de force Gravity’s Rainbow, “My mother is the war.” Spot on.
Certainly, war is the mother of the state. Without the reality, or a credible threat, of total war, Big Government loses its existential justification. Without such justification, it is doomed.
Well, Mom’s dead. All unnoticed, Big Government has been orphaned. It has lost its protectress. Absent a successful concoction of a casus belli by the warmongers among us, Big Government is set to fall. If we play shrewdly the hand we have been dealt, Big Government will fall faster than most of us yet imagine possible.
In the iconic movie Goldfinger the villain, Auric Goldfinger, pursues a nefarious scheme, code-named “Operation Grand Slam,” to contaminate America’s gold horde at Fort Knox, thereby leveraging the value of his own, uncontaminated, holdings.
Bond: Yes, well, I’ve worked out a few statistics of my own. 15 billion dollars in gold bullion weighs 10,500 tons. Sixty men would take twelve days to load it onto 200 trucks. Now, at the most, you’re going to have two hours before the Army, Navy, Air Force, and Marines move in and make you put it back.
Goldfinger is a superb metaphor for what really occurred to contaminate the gold standard’s reputation, keeping it off the policy table for 80 years — longer than even Goldfinger’s ambitions. The contaminating events produced an intellectual trauma that brings economists such as Obama adviser Austan Goolsbee to tweet such nonsensical doggerel as “Roses are red. Violets are pink. Don’t listen to goldbugs. No one cares what they think.”
"[The gold-exchange standard] was the outcome of an unbelievable collective mistake which, when people become aware of it, will be viewed by history as an object of astonishment and scandal." -- Rueff
In The Monetary Sin of the West (The Macmillan Company, 1972, 1971, pp. 23-24), Jacques Rueff addressed the "original sin" that stands behind the monetary disorders of his, and our, era. He begins, prophetically, in words written shortly before President Nixon ended, rather than mended, the disordered remnants of gold convertibility:
"The problem of Western currency is more topical than ever. For ten years now, the international monetary system has been patched up by many expedients that were intended to extend its assured life. It cannot endure very long in the present state."
Rueff forcefully addresses, on pages 23 - 24, the nature of the original sin that caused the world's expulsion from the monetary relative Eden that was the classical gold standard:
[T]he gold-exchange standard brought about an immense revolution and produced the secret of a deficit without tears. It allowed the countries in possession of a currency benefiting from international prestige to give without taking, to lend without borrowing, and to acquire without paying.
Who is Jacques Rueff?
With Bastille Day just past, let us pause, briefly, to salute the greatest economist of the 20th century: French monetary statesman Jacques Rueff. The little-publicized Rueffian school (to which this writer belongs) quietly is working to gain influence in the corridors of power to revitalize Rueff’s great legacy, the classical gold standard.
BY RALPH J. BENKO:
The 21st Century Gold Standard
Read The 21st Century Gold Standard: For Prosperity, Security, and Liberty by Ralph Benko and Charles Kadlec to learn what the gold standard is, how it works and how a dollar linked to gold would pave the way for a new age of American prosperity.