The True Gold Standard (Second Edition)
In 1980, that terrible year of stagflation, when Ronald Reagan was gaining the Republican nomination for president, dueling editorials appeared in the Wall Street Journal about “The Battle for Reagan’s Soul.” The first, by that title, came from neo-conservative sage Irving Kristol, who alerted readers that an effort was on by the establishment to capture Reagan. Individuals like Alan Greenspan, one supposes, and other Nixon-Ford leftovers were counseling Reagan not to strive to get everything he wanted. In the interest of a balanced budget and defense buildup, said prudence, he should go easy on tax cuts and even a stringent monetary policy.
Lewis E. Lehrman, the raconteur entrepreneur, piled on with “Stop the Battle for Reagan’s Soul.” Just do it all, Lehrman said, implying cut taxes, strong defense, robust trade, modest safety net, spare regulation—and gold-based money. Lehrman’s logic: if you do it all, you’re likely to get everything. If you do a little, here comes nothing.
Alexander Hamilton was America’s first Secretary of Treasury under President George Washington. When he first entered office in 1789, America was an agricultural nation of just 4 million still broke from its financially costly victory over the British Empire in the Revolutionary War.
The states had accumulated relatively massive debts to finance that war, which mostly remained unpaid. The United States did not even have a national currency, with Spanish coins still in wide circulation and use. Steve Forbes explains in his recently published definitive work, Money: How the Destruction of the Dollar Threatens the Global Economy and What We Can Do About It, “America’s finances were in a state of disarray after the wild inflation resulting from massive money printing during the American Revolution.” As a result, “Hamilton faced the challenge of restoring the economy of the young republic that had been devastated by the Revolutionary War….”
Comes now to respectful international attention a volume entitled War and Gold: A 500-Year History of Empires, Adventures, and Debt by Member of Parliament Kwasi Kwarteng. This near-perfect volume appears with almost preternaturally perfect timing around the centenary of the beginning of World War I and, with that, the end of the classical gold standard. It, along with the work of Steve Baker, MP (co-founder of the Cobden Centre), constitutes a sign of sophistication about the gold standard in the British House of Commons.
Kwarteng, the most historically literary Member of Parliament since Churchill, is an impressive figure. As War and Gold‘s jacket flap biography summarizes, “Kwasi Kwarteng was born in London to Ghanaian parents in 1975. … After completing a PhD in history at Cambridge University, he worked as a financial analyst in London. He is a Conservative member of parliament and author of Ghosts of Empire: Britain’s Legacies in the Modern World.” Kwarteng thus possesses four crucial skill sets: an international, multicultural, perspective; rigorous training as an historian; direct experience in the financial markets; and the perspective of an elected legislator. It shows.
The gold standard, that great agent and guarantor of equitable prosperity, was, as ever, an early casualty of war. For a century it, and far too often equitable prosperity, faced an intermittent headwind of hurricane force. Now, with the tailwind of Peace — itself a headwind for proponents of Big Government — the gold standard becomes recoverable. Led by Ron Paul, Lewis E. Lehrman (for whose Institute’s thegoldstandardnow.org this writer serves as editor), Steve Forbes and others, let us now recover it.
A century of war ends. A golden age beckons.
Do your part, gentle Reader. Celebrate the end of a century of all-out war. And with that celebration now let the era of Big Government, having served its purpose, to combat tyranny, draw to a close.
Not only is China the world’s top gold-producing and consumer nation but according to media reports, the country now has plans to become a major player in market pricing.
According to reports, the People’s Bank of China has given the Shanghai Gold Exchange permission to build an international gold-trading platform in Shanghai. The exchange has already contacted foreign banks including HSBC, ANZ, Standard Bank, Standard Chartered Bank and the Bank of Nova Scotia and invited them participate in a new international board.
China’s announcement to create an international price platform comes during a time of intense scrutiny of gold benchmarks. On Friday, the British regulator, the Financial Conduct Authority, fined Barclays Bank Plc GBP26 million for failing to adequately manage conflicts of interest between itself and customers, as well as “systems and controls failings,” connected to the London gold fixing.