The price of gold is once again testing its all-time highs
as both individuals and institutions flee the chaos of our times toward safety.
What John Maynard Keynes decried as the barbarous relic just keeps coming back.
The worse government policies become and the more deranged and dysfunctional
the Federal Reserve is revealed to be, the more people are turning to
time-tested monetary truth.
In a sense, the price of gold can often work as a barometer
of confidence in the central managers. The higher it goes, the less trust in
the system there truly is. For a century, the elites have wanted gold to
disappear from the subject of money. But it keeps not happening.
Like clockwork, there’s renewed interest even in the old
gold standard.
“Rep.
Alex Mooney —joined by Reps. Andy Biggs and Paul Gosar —introduced the Gold
Standard Restoration Act, to facilitate the repegging of the volatile Federal
Reserve note to a fixed weight of gold bullion. Upon passage, the US Treasury
and the Federal Reserve are given 24 months to publicly disclose all gold
holdings and gold transactions, after which time the Federal Reserve note
dollar would be formally repegged to a fixed weight of gold at its then-market
price.”
The timing is more brilliant than it appears. The dollar as
the international reserve currency—which it has been since 1944—is newly under
threat. China, Russia, India, Saudi Arabia, and Brazil, with other nations
joining, have all agreed to work toward independence from the dollar.
The
Biden administration has so heavily politicized its use as a reserve currency,
even going so far as outright confiscation of assets owned by Russians. US
policy is using the dollar as a weapon, and it should come as no surprise that
many nations don’t like that.
There’s the additional and very real threat, too, of a
central bank digital currency (CBDC) in which the Biden administration has
shown great interest. This would permit a massive invasion by the government
and its monetary oligarchs into our private lives and permit new levels of
population control that will make the Bill of Rights a dead letter.
If
there were ever a time to push for a new gold standard, it’s now, although it
should have happened 43 years ago, when the Reagan administration had the
chance to do so. This might have been the key to preserving newly restored
American freedoms rather than allowing the central bank to preside over the
wreckage of this country.
The presidential campaign of 1980 was a turning point for
the United States, away from the economic malaise of a highly regulated industrial
sector with a dollar rapidly declining in value and toward deregulation and
sounder money. Looking back, the dramatic policy turn of the Reagan presidency
prepared the groundwork for decades of prosperity. It built a capital base so
strong that it seemed nothing could wreck it.
An unfulfilled part of the 1980 Republican Party
platform—pushed by David Stockman and George Gilder—was an endorsement of a
gold standard; that is, the dollar redefined in terms of gold instead of the
floating paper nothing it had been since the catastrophic reforms made by
Richard Nixon that unleashed a decade of inflation.
That part of the 1980 platform was neglected. As a result of
the Nixon reform and the failure to reverse that disaster, the dollar of Aug.
13, 1971, is now worth about 13 cents.
With a gold standard in place and the end of the Cold War
only eight years away, the United States was perfectly positioned to
reestablish itself as the peaceful commercial Republic that it was founded to
be rather than the entrenched global empire it became after 1990.
With the seemingly existential threat of Soviet communism
out of the way, the United States could have chosen George Washington’s path as
he stated in his farewell address, “The great rule of conduct for us, in regard
to foreign nations is, in extending our commercial relations, to have with them
as little political connection as possible. So far as we have already formed
engagements, let them be fulfilled with perfect good faith. Here let us stop.”
Instead of that path, the United States under the first
George Bush immediately set out on another imperial crusade for democracy and
nation-building. No longer restrained by Cold War calculations and mutually
assured destruction, the United States was the winner in the struggle, throwing
away its chance for peace and prosperity with wars in Haiti, Panama, and Iraq,
stirring up hatreds in faraway lands that, a decade later, came home in
horrifying acts of terrorism on our own soil. A whole region of the world now
lies in ruins, and Europe is destabilized with war refugees.
Why did
the United States take this course when it so obviously could have been
otherwise? The short answer is that it could. And the reason it could is that
the Federal Reserve’s paper money regime would pay the bills. Paper money has
been the handmaiden of war and empire since the ancient world, and the worst
example is the 20th century itself.
It’s highly doubtful that there ever would have been a thing
called a “world war”—grotesquely called the Great War at the time—had both
Europe and the United States not adopted central banks. The monetary math
wouldn’t have made it possible. They would have chosen diplomacy over war.
The astute economist Benjamin Anderson proved it in
his postwar treatise on the subject. It’s true that most currencies in the
world back then were backed by gold, but the critical service the central banks
provided was to become a buyer of last resort of government debt. This became a
grave moral hazard back then, just as it is today.
But let’s return to 1980. Instead of a gold standard, we got
better and wiser money management by the Federal Reserve under Paul Volcker,
who wrenched the paper excess out of the system and set the dollar up for
decades of relatively low inflation. He did nothing, however, to put an end to
policy discretion.
Instead of following through on the gold standard, Reagan
appointed a commission to study the issue. We know what that means! Of course,
the commission was packed with paper-money fans with the gold-standard
partisans in the minority. The minority report of that commission
remains a genuine classic of monetary analysis. The lead author was none other
than Ron Paul, who has been fighting for sound money throughout his entire
career.
The case for a gold standard is bound up with the case for a
limited government that follows the Constitution and protects the rights of the
people. That’s precisely the problem that people have with the idea. It would
put a hard stop on Federal Reserve monetary discretion. It would also require
that the whole of the federal government balance its budget the same way that
states have to today. Lacking a central bank with the power to print unto infinity,
vast numbers of the debates we have today about federal policy, domestic and
foreign, would melt away.
The
great flaw in the gold standard, however, isn’t its logic or virtue but its
political and managerial probability. The agenda has always required that the
managers of the system as it exists also come around to the view that they
should have less power and less discretion. It depends fundamentally on the
existing monetary oligarchs choosing a path that’s good for society rather than
themselves. That, sadly, seems quite unlikely.
A path even wiser than a centralized gold standard would be
the complete denationalization of money itself. This could happen with a repeal
of legal tender laws and a wholesale liberalization of both gold as money and digital
money that works like gold, such as Bitcoin and its many decentralized cousins.
We have the technology to make this happen. What’s missing is the political
will.
As in 1980, we’re at another turning point. With the dollar
as the international reserve currency facing its biggest challenge since World
War II and the domestic value of paper money losing its reliability by the day,
we do need dramatic reform. At this stage, we face a choice between more
tyranny enabled by the nightmare of a CBDC and monetary deregulation that would
allow markets and people to choose their own preferred means of exchange.
Courtesy: The Epoch Times
