The True Gold Standard (Second Edition)
The United States Senate moves toward the confirmation of Janet Yellen, now posited for next January 6th, as chair of the Federal Reserve System. Let us in this moment of recess reflect on eerily similar observations by two of history’s most transformational figures: John Maynard Keynes and Nicolas Copernicus.
One of Keynes’s most often-cited observations, from his 1919 The Economic Consequences of the Peace, chapter VI, contains an indictment of policies very like those which the Federal Reserve System has been implementing for the past dozen, and more, years. These policies in slow motion are, in the opinion of this columnist, at the root of the very political, social, and cultural dysphoria — uneasiness or generalized dissatisfaction — predicted by Keynes:
I’ve said that we need a “shelf of books” that are contemporary and relatively free of error, to help guide the world back to a gold standard system. The world may not want to go that way; but, we can be reasonably sure that you can’t make a functional and reliable gold standard system if you can’t even write a decent book about it.
Unfortunately, most books of the past century or so are, frankly, rather poor. They have many worthy elements, but are often so riddled with problems that, in my opinion, they cause more harm than good. I couldn’t honestly say: “Here, read this.”
Exhibit A: Cato’s annual monetary conference.
Last month, Cato conducted its 31st annual monetary conference on the topic “Was the Fed A Good Idea?”
By virtue of the prestige that has accrued around this annual event Cato was able to present the insights of some of the foremost thinkers, and policy makers, in the increasingly important monetary policy sector. While Neo-Keynesians rationalize the austerity their policies are generating, Cato prescribes policies to generate equitable prosperity.
Nicolas Copernicus is a scientific icon. He, of course, discovered that the Earth revolves around the Sun. Copernicus also wrote a little known essay entitled On the Minting of Money. Last month, Laissez Faire Books issued a lucid, meticulously retranslated, new edition of this formerly obscure work.
On the Minting of Money presents the case for the classical gold standard. It is beautifully written and as relevant to 2014 as it was to 1526. Let’s hope the monetary authorities listen this time.
Copernicus’s insights on monetary policy are as profound as were his astronomical insights, although not yet assimilated by the culture. Two well recognized modern proponents of restoring a 21st century gold standard, Ralph Benko and Charles Kadlec — contributors to Forbes.com Opinions and advisors to the Lehrman Institute’s highly regarded web-based compendium on all things gold standard, served as editors.
An erudite classicist, Professor Gerald Malsbary, provided the translation. Reagan Gold Commissioner (and founder/chairman of the Lehrman Institute) Lewis E. Lehrman also contributes to the foreword. Lehrman:
“the mathematical proofs that Ptolemy used to show the Earth as the center of the solar system were superseded by the verifiable calculations of Copernicus. The Earth did revolve regularly around the sun, not the other way around as Ptolemy’s detailed calculations suggested. Thus, we live in a Copernican world, preceded by the Copernican revolution. What Copernicus established as the scientific rules governing money are as true today as are the path breaking rules of Copernicus governing the solar system.”
Benko, in an introduction, observes that “the gold standard has unrivaled intellectual pedigree” and, with Copernicus’s contribution to monetary policy now translated and readily available, “the elegance of the provenance of the gold standard hereby is restored to its deserved level.”
Public intellectual Paul Krugman recently consigned to Hell, in a New York Times op-ed column entitled A Permanent Slump, the world economy.
Yes. What if?
And what if Paul Krugman is one of the chief architects of these depression-like conditions?
As this columnist recently wrote, about Professor Niall Ferguson’s dismissal of Prof. Krugman from polite company, “Krugman’s horns now forever will show under his dislodged faux halo.”