The gold-convertibility standard, which worked reliably for a couple of centuries, had the flexibility for trade. Under it, a central bank or government guaranteed to exchange a certain amount of dollars for one ounce of gold. You could not only hand in a gold coin for a fixed amount of paper, but you could also hand in a fixed amount of paper for gold. As trade expanded, the government allowed the money supply to expand until gold mining caught up with it. The prosperity was slow but fairly steady. More importantly, a real gold standard brought freedom from anxiety. A young man who lucked into a modest inheritance could keep the money and rest assured that it would keep its value until it was time for him to retire. So could the lad who saved his pennies for the same goal. Neither had to turn to Wall Street to keep what they had. All they needed was deposit accounts in an honest bank, in days when many banks were honest. It was safe to save.
Nowadays, it isn’t. The freedom from anxiety that a real gold standard brought is gone. In its place are worried investors who look at the stock-market averages going nowhere while their costs inexorably climb. There’s no resting easy for them. Sadly, their anxiety opens their ears to blandishments about the gold standard being too “rigid” for an expanding economy.
But thankfully, more and more people are waking up to the fact that the experts have made serious mistakes. Those old blandishments are increasingly being seen through. Support for the gold standard has gone way beyond its former confinement to the ranks of alarmists and gold sellers. The Lehrman Institute has been in the forefront of making a real, practical gold standard a solid pillar of a sensible pro-growth supply-side solution for America’s woes. The gold standard is now close to mainstream in the Tea Party movement. Americans are waking up.
That woman I mentioned in the first blog post in this series has two little daughters. When they become her age, they may well flip half-ounce gold coins– both dated 2032 – like they were skipping stones…while deciding whether or not to spend them on software upgrades for their robot butlers.