The True Gold Standard (Second Edition)
Key Writings: Benko on the Gold Standard
On July 10th, Federal Reserve Board Chairman Ben Bernanke made a widely noted speech before the National Bureau of Economic Research, in Cambridge, Massachusetts: “A Century of U.S. Central Banking: Goals, Frameworks, Accountability.” The immediate takeaway? Rumors of the “tapering” are widely exaggerated.
Chairman Bernanke’s speech provided much more: an overview of the Federal Reserve’s history on the occasion of its centennial. Bernanke: “I’m glad to have the opportunity to participate [in this conference in recognition of the Federal Reserve's centennial]. In keeping with the spirit of the conference, my remarks today will take a historical perspective.”
Toward its conclusion: “Both research and experience are needed to help the Fed and other central banks develop comprehensive frameworks that incorporate all of these elements.” Especially in the spirit of Mr. Bernanke’s commitment to transparency and accountability his concluding remarks surely encourage the prospects for passage of the pending legislation introduced by Rep. Kevin Brady (R-TX), chairman of the Joint Economic Committee, to constitute a Centennial Monetary Commission, HR 1176 .
NYU’s Nouriel Roubini is a very elite public intellectual. Together with Princeton’s Prof. Paul Krugman Prof. Roubini is one of the most acidly eloquent critics of gold. Earlier this month he published an essay titled After the Gold Rush. (Its title suggests homage to Neil Young’s song, based on a never-produced movie, of the same name. This reader found the words “I was thinking about what a friend had said. I was hoping it was a lie.” echoing in his mind while reading.)
Since Roubini teaches at NYU, and Krugman at Princeton, it is worth noting that Albert Gallatin, founder of NYU, and John Witherspoon, sixth president of what would become Princeton, both were sophisticated proponents of the gold standard. Both were passionate critics of fiduciary paper currency. Witherspoon called paper money “absurd and contemptible.” Gallatin wrote “Gold and silver are the only substances, which have been, and continue to be, the universal currency of civilized nations.” Both great statesmen would cringe at the subversion of the institutions they built to the cause of fiduciary monetarism.
“The most important human resource, the only true natural resource, is the human mind.” — John Allison (now Cato Institute president), quoted in Knowledge and Power, by George Gilder
George Gilder, whose new book publishes today, is one of the original pillars of Supply Side economics. As stated by Discovery Institute, which he co-founded, “Mr. Gilder pioneered the formulation of supply-side economics when he served as Chairman of the Lehrman Institute’s Economic Roundtable, as Program Director for the Manhattan Institute….”
He was the living writer most quoted by President Reagan. And he is back with his most brilliant work yet — one of potentially explosive importance if taken to heart by our political and policy thought leaders. It is a radical guide, with surprising insights on almost every page, to the creation of a new era of vibrant prosperity.
After writing his best-selling Wealth and Poverty Gilder most notably spent decades traveling down various rabbit holes into, and thoroughly exploring, technological Wonderlands. He has been an essential guide to the technological cornucopias that immensely enrich our lives. He personally surfed the tech bubble and experienced, very up close and personally, its pop. Gilder is a veteran of the ecstasy and agony of entrepreneurship: a player, not a spectator. Gilder’s Knowledge and Power: the Information Theory of Capitalism and How It Is Revolutionizing our World is his finest work, which is saying a lot.
Gilder — who, full disclosure, many years ago, invested in an ill-fated nanotechnology processes start-up involving this writer and, later, generously blurbed this writer’s small cult classic, The Websters’ Dictionary: How to Use the Web to Transform the World — has returned to the intellectual fray in a very big, quite possibly revolutionary, way. He provides an extraordinary rethinking of economics by way of information theory. In it he brings the argument for capitalism … as a humanitarian, and ecological, force … into the 21st century. In the process he makes trenchant comments on the economic shibboleths of both right and left (with more than glancing blows to both but much more devastation to the doctrines of statism and socialism).
... [Malcolm] Gladwell presents a list of the 75 richest people in history.
The vast majority of those who came of age during this period did not become plutocrats. But many people prospered. The neo-Keynesian narrative that the gold standard is synonymous with austerity is just wrong. Forbes.com columnist Nathan Lewis has written, “The Correlation Between the Gold Standard And Stupendous Growth Is Clear.”
Lewis observes that GDP growth between 1870 and 1912 was 682%. It was perhaps the greatest epoch of broad-based prosperity recorded in human history. It yielded many successes, both extraordinary and ordinary. It was an era of a rising tide lifting all boats. One hopes our officials will choose, soon, to replicate the formula. This correlation between gold and wide social prospering suggests that there may be an extraordinary implication to Gladwell’s thesis about extraordinary opportunity.
Libertarianism, thanks, among other factors, to the emergence of leading presidential candidate Sen. Rand Paul, is coming to the fore. It is presenting itself in fresh, less eccentric, and increasingly attractive ways. Moderate libertarianism may be capturing the fancy of an overtaxed, fed-up-with-debt-fueled grandiose government, war-weary, live-and-let-live, Republican base and American people.
Time Magazine recently featured Sen. Rand Paul as one of the 100 most influential people in the world. He was not just on the list. Time placed Paul on its cover for the first, though likely not for the last, time.) This may signal the emergence of the Libertarian Moment.
We didn’t arrive into this “Grandiose Government” pickle absolutely positively overnight. Sen. Paul and others seek to lead us on the path out and to safety. It will make their job easier if we better understood how we ended up in this gutter in the first place.
The road toward serfdom was a long and winding one. How did the American government transform from our servant to master? Where did it get the resources to move from a small, frugal, lighthouse-keeping cluster of agencies to its status of world-record “Hey Big Spender” which, with federal 2013 projected outlays of $3.8T, spends more than the entire GDPs of every nation other than the U.S. itself, China, and Japan?
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.