Where’s William Jennings Bryan When You Need Him?

The Financial Times is reporting that the Republican platform to be unveiled in Tampa next week calls for establishing a commission to examine whether the United States should go back on the gold standard. The theory behind this antiquarian fantasy, much loved by Ron Paul and his cult, is that by de-linking the dollar from the value of gold—a move begun by President Franklin Roosevelt in 1933 and completed by President Richard Nixon in 1971—America’s leaders have debased our currency and loosed the genies of inflation, since the Federal Reserve can print as many dollars as it likes.

It’s a curious time to call for a reversion to gold, but then virtually nothing in the Republican platform speaks to the America of today. For one thing, America hasn’t had a real bout of inflation since the 1970s, and in recent years, inflation has been nowhere to be found. Second, the dollar has never been stronger. The world’s investors have flocked to buy dollars in recent years. The interest payments they make on such purchases have fallen to naught, but they keep on buying because in a parlous world economy, the dollar is considered the safest investment of them all.

But according to the hard-currency hard cases, the dollar should be weak.  Since the Wall Street crisis of 2008, the Fed has periodically flooded the economy with dollars. (Well, parts of the economy, particularly banks. For homeowners, not so much.) That should have brought us ruinous inflation, according to theories beloved not just by Ron Paul, but Paul Ryan as well. And forced to choose between their theories and mere actuality, they—and now the entire GOP—are going with the theories.

What reverting to the gold standard would do would be to make it impossible for the Fed to act in a Keynesian fashion during a downturn. Locked into the value of gold, it couldn’t lower interest rates to stimulate the economy. In fact, this is what happened repeatedly in every downturn before Keynes came along. Governments didn’t lower interest rates or boost the economy to take up the slack in the private sector, which is why recessions throughout the 19th and early 20th century were both frequent and severe. It’s why farmers wanted the United States to go off the gold standard in the late 1800s, because it made it very difficult for them to get the credit they needed for next year’s crop and new equipment. It’s why they created the populist movement, and why that movement’s champion, William Jennings Bryan, thundered in accepting the Democrats’ presidential nomination in 1896, “You shall not crucify mankind upon a cross of gold!”

Now, the crucifiers have returned. Reverting to the gold standard, denying climate change, failing to grasp reproductive physiology, suppressing minority voting—from what century, what geologic epoch, what flat-earth society do the Republicans gathering next week in Tampa emerge? They’re not (when it suits them) just constitutional originalists; they deny all gains in human knowledge since 1787. Or maybe 787. Or maybe 87. Good Lord.

Comments

Of course reverting to the gold standard would make acting in a Keynesian fashion difficult. That's the entire point. Keynesian theory is largely what got us into this economic mess. Just how much more debt is enough to you? Good grief.

Reverting to the gold standard while idealistic, something that should make every Liberals ears perk up, IS doable but will be very difficult. First the government will have to stop printing money and living in debt. Yes, from where we are now, that is almost impossible. It is an idealistic utopia, another word for perking ears, but can be done with enough time and desire to live within your means. The Tea Party is setting us on that path and I hope they can do it.

Republicans keep arguing that we will have the same problems that Greece has if we keep using Keynesian policies. Of course this argument is specious because the Greeks are tied to the Euro and so can't print money. Now Republicans have hit on a solution. Return to the gold standard and we will be in the same predicament as Greece! What an opportunity!

Former Repub- Keynesian economics got us into this mess? Come again. Keynes went out of favor in this country during the mad rush to economic tomfoolery such as supply side economics and the various sub theories based on the idea that we are all well informed rational actors in the economic marketplace who have equal access to economic information and therefore we can just let the markets take care of everything while we cultivate a life of economic stupidity. Have you forgotten Alan Greenspan already?

This economic lunacy, combined with a blind rush to deregulation and the joyful demonizing of government institutions which now substitutes for the much more difficult task of making government work for all of us in this society and work efficiently, is what led us to an economic meltdown and the debt crisis. And it wasn't any Keynesian that brought us here, it was Reaganomics- which said we could spend like drunken sailors on defense systems and cut taxes at the same time - and the demon seed offspring of this economic mish-mash (have we already forgotten the brilliant Cheneyism "deficits don't matter"?). Heaven help us when we're too stupid to see our mistakes and learn from them. It's a slippery slope indeed.

Why is there no reasonable Republican voice? Essentially for the same reason the Democrats came to fear Republicans ; at first, in a manner you may question the actions or motives of a close relative that suddenly went a little bonkers. Initially you're in denial, gradually it becomes a constant contest of self defense from bizarre behavior. The assault on reason simply wasn't on the Dems radar. Who does that? Governing, though often messy was still viewed as a noble project for the greater good, negotiation and compromise carried the day. Things got done. Democrats thought the New Deal hatred had been sufficiently weakened, but it wasn't. Enormous wealth, made with dirty products wants enormous power, always. So big money enlisted the assistance of every fringe lunatic group, to habitually scream scary myths and lies, to jolt a dazed uninformed public to vote against themselves. Unions are evil, banking regulations are anti free market, pollution regulations - evil, taxes - evil. Like water to the path of least resistance, the GOP entrusted their brand to an oath of allegiance to 'the lie'. And Democrats never gave the threat proper validation. They ignored the building tidal wave of propaganda until it was right on top of us. They never bothered to fill the crack. This movement was based and built solely on a foundation of greed, lies and lust for plutocracy. Now there is no longer a Republican Party, only a den of angry, (likely from absorbing a few decades of carefully crafted, paranoia inducing, subterfuge) intellectually vacuous soldiers, doing the bidding of the super rich. Someone has to say it: the Republican Party has morphed into an American Taliban. I am liberal Democrat, yet my thoughts run parallel to many "real Republicans" in society and those that served in government as honest - noble brokers for the people's business. Eisenhower, God rest his soul, would have viewed the actions of the current GOP and it's owners, as insurrection. Once 'reason' has been vanquished, representative government's demise is certain.

Does it it occur to NP readers that the form of governance you so desire has been put into practice in the EU and California? How is it working in those places? Could it be that the best and brightest guided by enlightened humanism could f***up a one person parade?

The European Central Bank is so tightfisted it makes the Fed look like a bunch of drunken sailors; they've imposed crushing austerity across Europe. California's government is being strangled by constitutional restrictions imposing a supermajority requirement to raise taxes. As a result, Europe is an economic basket case and California is a fiscal one... and Republicans want us to adopt both policies for the U.S. as a whole.

That you answered the attack on "enlightenment humanism" shows a wide streak of optimism! That your analysis was so right on puts a small dent in my pessimism! Thanks.

"It’s why they created the populist movement..."

You'd think the media would be aware of this historical background before applying the term 'populist' to such movements as the tea-baggers.

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