Friday, August 2, 2013

Gold Defined Money and Monetary History at the Cato Institute: A Velvet Underground Event?

Ralph Benko
Lewis E. Lehrman, President Ronald Reagan’s gold commissioner and co-signer of the commission minority report “The Case for Gold,” recently debuted his latest book, Money, Gold and History. It’s a compilation of many of his writings from almost 40 years of publications, combined with new essays on the classical gold standard. Lehrman, author of the critically acclaimed The True Gold Standard, is a preeminent advocate of restoring the gold standard.
There are several options for a gold standard, ranging from Ron Paul’s prescription for choice in currencies to Lehrman’s prescription of the classical gold standard to Steve Forbes’s proposal of a “goldless gold standard,” in which “If the price of gold were to go above [$1,300], the Federal Reserve would sell bonds from its portfolio, thereby removing dollars from the economy to maintain the $1,300 level. Conversely, if the gold price were to drop below $1,300, the Fed would ‘print’ new money by buying bonds, thereby injecting cash into the banking system.”
Competing currencies (Hayek), defining the dollar as a fixed weight, and convertible into, gold (Lehrman), or having the Fed buy and sell bonds based on movements in the price of gold (Forbes) suggest some material differences.  Both Forbes and Lehrman encourage an empirical review and intelligent discussion of the various proposals.
The Centennial Monetary Commission legislation, which currently has 23 sponsors, is perfectly suited to carry out such a review and discussion. It would conduct a broad-based look at monetary policy, with a gold standard as one avenue to be discussed, and provide a forum for all who care about the effect of monetary policy.
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