Gold Standard Creates Growth

To choose or to reject the gold monetary standard is to choose on the one hand a free, just, stable, and objective monetary order, or on the other, to embrace a paper money, casino culture of speculation and the incipient financial anarchy and inequality it engenders.  Only currencies convertible to gold are indispensable safe guards of the wages and savings of the middle class, pensioners, and all working people.

Restoration of a dollar convertible to gold rebuilds a necessary financial incentive for real, long-term, economic growth by means of increased saving, increasing investment per capita, and entrepreneurial innovation in productive facilities.  Convertibility, therefore,  leads to rising employment and rising real wages underwritten by a stable, long-term price level—reinforced domestically, as it should be, by a stable, unsubsidized banking system—and internationally, by stable exchange rates convertible to gold.  During the past decade of managed paper currencies and floating exchange rates, American economic growth has fallen to 1.7%, at an average annual rate. Under the gold standard, U.S. economic growth averaged 3-4% annually over the long run.

The differential growth rates are no accidents of history.  The gold dollar, or true gold standard, underwrites, among other things, just and lasting compensation for workers, savers, investors, and entrepreneurs.  It prevents recurring, massive distortions in relative prices by manipulated paper currencies and floating exchange rates which misallocate scarce resources.  It minimizes speculative capital flows characteristic of a paper-floating currency system.  It rules out the “exorbitant privilege” and insupportable burden of official reserve currencies.  It limits and regulates abuse of fractional reserve banking.  It tends toward growth, not austerity.  It inspires long-term savings, entrepreneurial innovation, growing investment per capita, and rising real wages.  Moreover, the lawfully defined gold content of a stable currency encourages long-term lending and investment—more reliance on equity, less on debt.  With currencies convertible to gold, long-term lenders receive, say after thirty years, the same purchasing power—measured by a standard assortment of goods and services—compared to the capital or credit they surrendered to the borrowers thirty years ago to make long-term investments.  This fact is confirmed by the empirical data of the classical gold standard (1879-1914).