Understanding the Gold Standard

The reference by last year’s Republican Platform to a gold standard as a useful tool for restoring price stability was seized upon by editorialists, pundits, Democrats, and dissident Republicans as an example of the zaniness of the right-wing crowd that renominated Ronald Reagan in Dallas. What a difference a century makes. In 1896, a group of populist, fundamentalist religious zealots took over the Democratic Party, pledging, to the horror of the enlightened, to take the country off gold. Now, in 1985, a new group of populist, fundamentalist religious zealots is taking over the Republican Party, pledging, to the horror of the enlightened, to put the country back on gold.

The gold standard, once the very symbol of monetary and fiscal probity and the pillar of an international economic order, is now viewed as a kind of wild, radical experiment embraced by a band of reckless ideologues. It would be a mistake, however, to assume that the disapproval of their betters will be enough to keep the crazies from restoring the gold standard. Such disapproval didn’t prevent enactment of the Kemp-Roth bill, and it won’t scare off the gold-bugs. It may be time, therefore, to begin thinking seriously about how a gold standard would operate if it were adopted.

DG

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David Glasner

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The reference by last year’s Republican Platform to a gold standard as a useful tool for restoring price stability was seized upon by editorialists, pundits, Democrats, and dissident Republicans as an example of the zaniness of the right-wing crowd that renominated Ronald Reagan in Dallas. What a difference a century makes. In 1896, a group of populist, fundamentalist religious zealots took over the Democratic Party, pledging, to the horror of the enlightened, to take the country off gold. Now, in 1985, a new group of populist, fundamentalist religious zealots is taking over the Republican Party, pledging, to the horror of the enlightened, to put the country back on gold.

The gold standard, once the very symbol of monetary and fiscal probity and the pillar of an international economic order, is now viewed as a kind of wild, radical experiment embraced by a band of reckless ideologues. It would be a mistake, however, to assume that the disapproval of their betters will be enough to keep the crazies from restoring the gold standard. Such disapproval didn’t prevent enactment of the Kemp-Roth bill, and it won’t scare off the gold-bugs. It may be time, therefore, to begin thinking seriously about how a gold standard would operate if it were adopted.