On NPR this afternoon, I heard this discussion on the gold standard. Newt is trying to suck up to Ron Paul supporters by saying he is for the gold standard. The discussion on the program was informative, but like most media, they put up a crackpot against someone who knows what they are talking about, and then give both arguments equal weight and "let you decide."
Worse yet, they fail to research or challenge any of the "facts" cited by one of the "experts". One particular boner jumped out at me and almost made me drive off the road.
Jim Grant, a "respected Wall Street Publisher" (interesting credential) noted that the argument for gold begins with its role as the original money. From NPR:
"People recognize it as such. You don't need a Ph.D. in economics to have it explained to you. Gold is sort of the Muhammad Ali of monetary substances; the world over, you look at it, you know what it is," Grant says.
Pegging the dollar to gold would limit inflation, he says, and force greater fiscal constraints on governments because they couldn't simply print money to pay their debts or bail out bankers.
And, he says, it would bring the kind of stability to the monetary system that it had a hundred years ago.
Financial stability in 1912? First of all, look at the 1800s. Taking aside for the moment the Civil War, there were panics and bubbles of all sorts, such as the great railroad bust and a few mineral bubbles as well. And in the 1900s, there were a few as well. Something happened in 1929, but I can't remember at the moment what it is. Oh yea, the great depression. And we were on the gold standard then - we were until 1973 when Nixon took us off it.
From Wikipedia a short history of those "good old days" when the economy was stable and we were on the gold standard:
- Panic of 1819– pervasive USA economic recession w/ bank failures; culmination of U.S.'s 1st boom-to-bust economic cycle
- Panic of 1837– pervasive USA economic recession w/ bank failures; a 5 yr depression ensued
- Panic of 1857– pervasive USA economic recession w/ bank failures
- Panic of 1873– pervasive USA economic recession w/ bank failures, known then as the 5 yr Great Depression & now as the Long Depression
- Panic of 1893– a panic in the United States marked by the collapse of railroad overbuilding and shaky railroad financing which set off a series of bank failures
- Panic of 1896– an acute economic depression in the United States precipitated by a drop in silver reserves and market concerns on the effects it would have on the gold standard
- Panic of 1901– limited to crashing of the New York Stock Exchange
- Panic of 1907– pervasive USA economic recession w/ bank failures