First let me say that the chances of instituting a new gold standard under a Romney presidency are slim at best. But there has been talk of a new standard leading up to the Republican Convention, and some even within the party establishment acknowledge that it’s an issue which deserves more attention.
As such the statist bloggers have come out in force to denounce gold. They hate gold. Despise it. Loathe it.
Ezra Klein, who once said that the Constitution was incomprehensible because it was over 100 years old, follows the predictable path in Friday’s Washington Post and dismisses a new gold standard as silly. My bet is that he doesn’t own any.
But it isn’t their lack of a gold position which brings out the venom in the statists. It isn’t even the commercials for gold on conservative talk radio these days (though it does raise the liberal antennae) that raises their ire.
No, it is that a new gold standard might actually do what “conservatives” have been unable to do since the New Deal, and especially since the dollar was disconnected from gold, namely restrict the power of the state.
This is what the anti-gold folks fear most.
It’s not that gold will exacerbate recessions (which it won’t if a standard is constructed correctly) which is what the pro-state folks always say. It is that the state is replaced as the ultimate be all and end all for monetary issues by the “barbarous relic.”
If gold regains its rightful place as the North Star of monetary policy, this restricts the power of government.
It’s important to remember that the reason we went off the “gold standard” under Richard Nixon was because we ran up our bills and the French, who had loaned us money for the Vietnam War, insisted that we pay them back in gold. Since the USA didn’t have the gold to pay, Nixon detached the dollar from gold.
Unlimited fiat money is the mother’s milk of the welfare/warfare state. Gold counters the state and that is why some fear it so much.
(Washington Post, 8-24-2012)