The True Gold Standard (Second Edition)
“A balanced Input-Output framework…provides a more accurate and consistent picture of the U. S. economy.”
– Survey of Current Business
Starting in spring 2014, the Bureau of Economic Analysis will release a breakthrough new economic statistic on a quarterly basis. It’s called Gross Output, a measure of total sales volume at all stages of production. GO is almost twice the size of GDP, the standard yardstick for measuring final goods and services produced in a year.
The big run-up in the price of gold that has been a constant in this millennium finally broke a bit in 2013. From the peak of some $1850 per ounce (achieved in 2011), gold closed this past year around $1250, a decline of about a third. As we rounded into 2000 now nearly a decade and a half ago, gold was barely $300 per ounce.
Last year, the healthy phenomenon of asset-shift was at work. Investors piled out of the hedge that is gold into stock shares, which is to say titles to companies that are out there in the economy trying to do something productive. The more this process goes on, the more the world’s capital will be put to good use.
Nicholas Copernicus (1473-1543) is known today as the “Earth goes around the sun guy,” but he also advised the Royal Prussian parliament on monetary reform over a period of several years. During this time, he wrote an essay known as the Treatise on Money (1526). A new translation of Copernicus’ essay by Gerald Malsbary has recently been released via Laissez Faire Books. The book has many gems — things so simple and obvious that they have been forgotten by the majority of academic economists today, with the usual bad consequences.
“Money, or coinage, is gold or silver that has been specially marked — in accordance with policy established by any government or head of government — for the purpose of reckoning the prices of things that are bought and sold. Money is therefore a kind of common ‘measuring stick’ for the valuation of things. Now, whatever is taken as a measure has to be stable — must keep to a fixed limit. Otherwise, public order will necessarily be disturbed, and the buyers and sellers of things will be cheated many times over, just as if basic measures of length [Latin ulna, or ell], bulk measure [Latin modius, or peck], or weight did not have a fixed quantity.”
Many hands are being wrung among the elite governing class about Congressional gridlock. The Democrats have invoked the “nuclear option” — allowing the Senate majority in effect to prevail by simple, rather than 60%, majority. (This will come back to haunt them if majority control turns Republican in next year’s election.)
Fortunately for us mere citizens the House is still Republican controlled. It thereby is situated to block the worst Big Government initiatives.
In the great “Hunting of the Snark” on Capitol Hill many legislators of both parties have broken their picks in “supercommittees” and “gangs” and other efforts to foment a “grand bargain” or other grandiose deal. This typically is done in the name of “bipartisanship.”
“Bipartisanship” makes this writer uneasy. It often represents Washington code signifying collusion by Republicans and Democrats to stick it to the taxpayers and citizens. So in this celebratory season gridlock is something to celebrate.
Politicians — elected officials — are street smart rather than book smart.
If you care about influencing government policy it helps to know how they think.
Forbes.com contributor Nathan Lewis argues that