For 179 years, the dollar and gold remained linked. But on Aug. 15, 1971, Pres. Richard Milhous Nixon ordered the Treasury “to suspend temporarily the convertibility of the dollar into gold or other reserve assets.” Since then, Washington has created cash as easily as saying, “Shazzam!” The M3 money-supply measure soared from $688.4 billion in 1971 to $10.3 trillion in March 13, 2006, whereupon the Fed suddenly stopped publishing these inconvenient truths. This loose cash has helped Washington boost the national debt from $398.13 billion in 1971 to $14.34 trillion today. The dollar’s purchasing power has slid, meanwhile, even as gold has climbed from $35 per ounce in 1971 to $1,511 per ounce on Thursday.
In 2002, Ben Bernanke — then a Princeton economics professor and now Federal Reserve chairman — marveled at the Fed’s nearly supernatural powers. As he explained, it “has a technology called a printing press (or, today, its electronic equivalent) that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”
Bernanke’s estimated $1.7 trillion in quantitative easing, investment adviser Richard M. Salsman writes in Forbes magazine’s June 27 issue, is “a euphemism for money printing, a policy that’s akin to medical quackery — and potentially as lethal.” Salsman argues that Bernanke and his Fed buddies “contributed to massive budget deficits and then monetized the debt and caused inflation. The result has been a fiscal mess and interminable stagflation, but perhaps worst of all, the policies have established precedents for future monetary malpractice.”
From his lair high above Midtown Manhattan, FAME’s Parks monitors all of this with a single-mindedness that skirts obsession. As the repercussions of letting politicians invent money simmer in Washington and boil in Athens, Parks sees the path to economic sanity as clearly in 2011 as the Founders did in 1776.
“All we need to do is reassert the monetary powers and disabilities of the Constitution,” Parks says, “which require that America re-monetize gold and silver as money.”
— New York commentator Deroy Murdock is a nationally syndicated columnist with the Scripps Howard News Service and a media fellow with the Hoover Institution on War, Revolution, and Peace at Stanford University.