Return To The


The best idea of the primaries comes from Steve Forbes: return to the gold standard. Bless him and it, because a gold dollar is the way to deal with today's main political and economic issue: the government is getting richer while the people are getting poorer.

Ha, ha. I can hear the laughter now. Only crazies like gold, right? Let's see. In the twenty-five years since Nixon took us off gold, we've experienced a 75 percent devaluation in the purchasing power of the dollar. Wages and incomes have been flat or falling.

The paper-fed Leviathan was unleashed, with federal spending zooming nearly 700 percent. The government bails out anything that moves, including foreign governments, while federal debt rises $900 million a day. Meanwhile, the Federal Reserve swings elections. Given this, only wackos -- or tyrants -- should defend paper money.

The end of gold resulted in the longest and biggest inflation in U.S. history. The miserable days of 1976 - 1981 may be as forgotten as shag carpet, but we still suffer the consequences. Those days massively diminished the capital stock, wiped out savings and pensions, and drove women into the workforce, eventually making the one-income family a relic.

Even when prices aren't soaring, paper money redistributes wealth in more subtle ways. Debtors benefit at the expense of savers, government contractors benefit at the expense of independent businessmen, welfare clients benefit at the expense of the middle class.

As a result, people are reluctant to save as they once did. Far better to borrow and pay everything off in cheaper money. It's why young parents open fewer savings accounts for their children, middle-aged people put so little away, and old folks blow every last dime rather than pass it along.

Paper money goes hand-in-hand with the welfare state, the welfare state, the Mexican bailout, and Social Security. It turns the government into a vast counterfeiting operations.

Think how powerful you would be if you could print up unlimited amounts of money, and secure your debt with dollars made by fiat. So it is with governments, except it's our savings and lives they're destroying. Inflation, no matter how fast or slow, is no different from outright theft.

Paper money also allows the Fed to manipulate the political landscape. For instance: one week before Alan Greenspan was reappointed, Bill Clinton broadcast his terms: a "national debate" on whether the economy can "grow" faster. Translation: "Alan, you'll be out of work unless you try to get me elected."

Isn't there something wrong when Mr. Greenspan and a handful of colleagues, meeting in impenetrable secrecy, can decide such things as the fate of a presidency? It's only been the case for 25 years. Prior to that, gold restricted the possibilities for creative government finance.

Linking the dollar to gold would restore economic security by stabilizing prices, smoothing business cycles, and rewarding savers and capitalists who think ahead and invest in the future. It would remove the unnatural volatility from international exchange.

Gold would also limit the central bank's power and, thus, the power of the government itself. Inflating too much would cause dollar holders to redeem their paper, a mechanism that serves as a built-in block to currency depreciation.

Republicans used to understand this. In 1896, William McKinley, a hard-money man, beat the crazed inflationist William Jennings Bryan on exactly this issue. Right wingers fumed when FDR confiscated the people's gold in 1933, and when Nixon closed the gold window in 1971. As late as 1980, the Republican platform called for a gold standard.

Even today, show me a gold standard advocate and I'll show you someone who believes in less government and the free market. Gold is the favored monetary system of every real conservative because it's honest, and it forces government to cut back and balance the books.

The immediate effect of a gold standard would be to put an end to the inflation that's made the McKinley dollar worth less than a cent today. Relative to prices, our incomes and wages would begin to rise again. A dollar saved would be a dollar earned.

Honest money should unite social and economic conservatives. Only a crook manipulates weights and measures to his own benefit. Money especially needs a strict weight and measure. When? Now. Where? America first, then the world will follow.

Llewellyn H. Rockwell, Jr., is president of the

Ludwig von Mises Institute,

Auburn, Alabama 36849-5301

(334) 844-2500 l Fax (334) 844-2583

Copyright © 1996. The Light Party.

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