The Floating Kilogram

"The gold standard is a niche enthusiasm rejected by most economists."

"This brilliant book is The Federalist Papers for a gold standard. It succeeds, dazzlingly – and convincingly – makes the irrefutable case for re-linking the battered Dollar to gold."

"Academic economic history has hitched its wagon to a particular star, the trashing of the gold standard. The funny thing is that this stuff really didn't intensify, in academic economic history, until the 1980s, when the conditions were actually beautiful for a return to the gold standard. Students of economic history were not so foolish as to endorse fiat currency in the 1940s, as Bretton Woods was gathering, even though Keynes was urging just that. Paul Samuelson and a few others were trashing gold in the 1950s and 60s, but that was not the norm. Sadly, I think, it was the misconstrual of Milton Friedman's argument about a 'free market for money' that gave the patina of respectability to the anti-gold argument.

 

"The 1970s were such terrible egg-on-the-face of the fiat-money argument it is astounding that fiat money ever survived the episode. It is an irony of the success of the Reagan Revolution that it permitted fiat money to continue apace."

"We're speaking here about the timing of the rapid rise of the blasted inequality over which Professor Piketty is so upset. After all, this inequality has become the cause celebre of the season for President Obama and his entire political party. It's the issue of the hour. Yet when it comes to the timing at which this phenomenon presented itself, nada. Omerta.

 

"Well, feature the chart that Professor Piketty publishes showing inequality in America. ...It plunged during the Great Depression and edged down in World War II, and then steadied out, until we get to the 1970s. Something happened then that caused income inequality to start soaring. The top decile's share of income went from something like 33% in 1971 to above 47% by 2010.

 

"Hmmmm. What could account for that?...But, say, what about the possibility that it was in the middle of 1971, in August, that America closed its gold window.... That was the default that ended the era of the Bretton Woods monetary system.

 

"There is an irony here for Monsieur Piketty. It was France who gave us Jacques Rueff, the economist who had the clearest comprehension of the importance of sound money based on gold specie. He was, among other things, an adviser to Charles De Gaulle. It was De Gaulle who in 1965, called a thousand newspapermen together and spoke of the importance of gold as the central element of an international monetary system that would put large and small, rich and poor nations on the same plane. We ran the complete text of Professor Piketty's book Capital through the Sun's own "Electrically-operated Savvy Sifter" and were unable to find, even once, the name of Rueff."

"In monetary matters, as Lipsky observes, America is busily going backwards: from the gold standard to the PhD standard, and from central banking to a kind of new-age central planning.

 

"The Founders did foresee the growth of a free press, however, and the Fed and the Congress proceed in these cockeyed experiments under the fierce, yet scintillating, gaze of the Sun. Lipsky's mentor on the Wall Street Journal, Robert L.Bartley, once quipped, 'It takes 75 editorials to pass a law.' He was dealing with mere tax reform. With 130 editorials already in print, though, Lipsky is fast approaching the point of policy crystallization."