Mexican Gold

Let's see what the wingnuts do with this!

In case any of you were under the impression that Paul Ryan is anything but a nutty kook, DougJ finds him backing the gold standard. He asks the question of when all the currency craziness on the right started, but that’s a fairly easy question so far as I can tell: it began with Ron Paul’s 2008 presidential bid, which featured these very positions. Before him, the only murmurs I ever heard about this stuff were from very fringe right-wingers. But within three years, it’s suddenly a mainstream Republican position! We’ve gone from the tax-based Keynesianism of Bush to something even more radical than Friedmanite monetarism, to something that could literally be called Hoovernomics! What a crazy world.

I think the problem with gold standard nostalgia is that, like people’s deceptive longings for “smaller government” while opposing almost nothing the government does (aside from foreign aid, a piddling expenditure in the grand spirit of things), it’s a cultural complaint wrapped up in a political argument. We’ve all seen a million polls showing that the public believes firmly in slashing spending, but when asked about specific cuts, nobody wants to cut anything. But the notion of “smaller government, like it was back before all this mess happened” will have a certain appeal to people who want to turn back the clock on society anyway. When you get down to it, very few people want to get rid of Medicare or the FDA. But there are a fair amount of people (let’s just call them the Republican base) who are very comfortable with the idea of going back to the social mores of, say the early 1900s. So, you have a scenario where a lot of people argue vociferously for smaller government when they’re really just unhappy with the directions modernity has taken. Or so goes the theory, anyway, but it does happen to fit the facts. The gold standard stuff is trickier to easily diagnose, but I suspect it’s growth has been driven on the right over the past few years by a deep mistrust of the financial system and how debt has been commodified and sold, as well as a sense that lavish spending by the government is going to lead to hyperinflation, and from there to Weimar Republic, and Hitler, of course! You can see it in the grilling Republicans gave Ben Bernanke on inflation the other day. Inflation is so low it’s hardly worth even worrying about, but Republicans are worried about it. They have their Glenn Beck-driven theories floating around in their heads! If only we could have some guarantee that our money won’t be worthless. Alas. That theory most definitely does not fit the facts, indeed, it’s a silly and hysterical one propagated by professional shriekers. But I can see how the notion of “backing up our currency” could take hold if you share the Beckian assumptions about things.

So, therefore, the Gold Standard is making a comeback. I don’t expect it to be long-lived, since it’s basically a populist, truthy reaction to the Wall Street collapse and the crummy economy. As an economic idea, it’s pure garbage. Paul Krugman has often written about how it constrained economic recovery efforts until Franklin Roosevelt finally ditched it (though remnants of it hung on until Nixon’s presidency). But if you should happen to be a proponent of this dubious theory, if you think a Gold Standard would somehow keep the economy running more smoothly, I would think the list of terrible panics and often nonexistent economic growth during the “sound money” era would at least make you wonder if it’s the silver bullet you’ve been promised. Also, this is a bit off the topic, I’ve often wondered why the business community doesn’t push harder for internationalist, Keynesian political candidates. I mean, the Chamber shilled for the stimulus package, but they also ran ads for Rand Paul, who is against regulation, but unless you consider that and taxes to be the only determinants of a good business environment it’s a poor choice. Isn’t it in business’s interest to have people with sensible policies on this stuff? They used to play this role–they were behind giving Eisenhower the Republican nomination over isolationist/”sound money” type Robert Taft–but I guess it’s yet another data point to show you that these days, businesses really don’t care about anything other than tax cuts and less regulations.

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  1. Schu says:

    Oh yes, the good old days, when small pox, meningitis, and polio ruled. When when women knew their place, children could be whipped, and the lower class all knew their place. When the life expectancy for the average person was 50. When alcohol was illegal and the only entertainment was the church ice cream social. And things where beautiful and everyone was happy! Ummm, just when was that anyway?

  2. […] on to Lev’s post about Republicans and their obsession with hyperinflation and the gold standard, Tom Levenson spots […]

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