A Tragic Half Century without Gold Money

The comments below are an edited and abridged synopsis of an article by Richard M. Salsman

In 2012, a poll by the University of Chicago of three dozen academic economists showed that all rejected the gold standard as monetary system for current times. Professors from eight prestigious universities spoke with one voice and no intellectual diversity.

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Had similar academics been polled a century ago they would have extolled the gold standard; they would have expressed regret at having just witnessed the political sabotage of the well-functioning, well-respected gold standard during WWI; they would have warned against resorting to watered-down versions of the gold standard; they would have opposed arbitrary fiat-money regimes.

Unlike foes of the gold standard today, its fans a century ago had facts and logic on their side; also, nothing material has transpired since 1921 to make the case for a golden monetary system any less valid. Indeed, the current unanchored system of monetary nationalism, with its dozens of floating and sinking currencies both defies logic and deranges economies. This is what today’s enemies of gold implicitly condone: the subjective, the arbitrary.

Today the case for a gold-based monetary system is dismissed as quackery; a century ago, opposition to gold-based monetary systems was likewise ridiculed. A phenomenon this reveals is that economics is downstream from politics, just as politics is downstream from culture and morals. For good or ill, politicians and bureaucrats get the monetary system that they want.

The gold standard wasn’t suspended in 1933-34 because it caused the Great Depression or bank failures, nor did it disappear in 1971 because it somehow didn’t work anymore. It’s been gone since 1971 because fiscal alchemists couldn’t make it work like magic, meaning: They couldn’t expand the gold supply as much as they expanded government.

In a comprehensive article, Salsman discusses fifty years without a gold-based monetary system; gold and economic prosperity; the welfare state and ever-higher taxes; statism; the production of money is not the same as the production of wealth; central banks and a gold price rule; the philosophic basis of the gold standard; and the required endorsement of the classical liberal philosophy held by America’s founding fathers.

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