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Amity Shlaes: Gold Standard for All, From Nuts to Paul Krugman

Amity Shlaes just wrote an interesting column about the gold standard and mentioned the recent Ron Paul vs Paul Krugman debate. She cites a study published in December 2011 by the Bank of England. Here are a couple excerpts from her column:

Markets and countries enjoyed relative stability in gold-standard years, and capital in those years flowed to worthy growth-generating projects. The main sacrifice in gold regimes that the authors identify is that governments lose authority to micromanage domestic economies. But given governments’ records, that may not be such a bad thing, either.

It all suggests that contempt for old gold hands such as Congressman Ron Paul of Texas might not be warranted. And that it might be interesting to peruse the numerous gold-related currency plans outside the door of the academic salon. Plenty of people, many former bankers, think it is time to pass laws returning the U.S. to some version, strong or weak, of the gold standard.

One reason people slap the nut-case label on others with impunity is that for the past 30 or 40 years most economic education has systematically excluded the gold standard and its exponents from the classroom. It’s easy to call something your professors never respected the work of a nut case. But it’s also worthwhile to ask why the professors white out the gold standard from the books. Perhaps it is because the systems they raved about in their dissertations, systems of flexible exchange rates, subsequently underperformed.

This inconsistency in their own modeling is of course hard to acknowledge. Recently Bloomberg Television drew enormous attention when co-anchor Trish Regan moderated a debate between Ron Paul and Paul Krugman, the Nobel prize-winning New York Times columnist.

Krugman sought to hold the middle ground, noting that all he sought, through his recommendation that federal debt rise to 130 percent of gross domestic product, was a return to the kind of America in which his parents lived. The professor treated the congressman’s remarks as unscholarly; in a blog post afterward, Krugman wrote “everything Paul said about growth after World War II was wrong.”

But Krugman too has some sorting through to do. The years when his parents lived were gold years, the Bretton Woods gold exchange standard, a time when the federal government, except in world war, would never had considered raising debt to 130 percent of the economy, as Krugman suggested in the debate.

If we are going to speak of consensus, let’s not forget one that is truly universal: Our economic system stands a good chance of breakdown in coming years. The only way to limit damage from such a breakdown is to ready ourselves to choose other models by learning about them now.

Not to do so would be nuts.

I find it wonderful and amazing that serious discussion of a return to the gold standard can show up in the daily newspaper. It's just another area in which Dr. Paul's life's work is bearing fruit.

You can read the entire column here:


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yeah, she's pretty interesting;

she's the wife of Seth Lipsky, the owner/editor of the The New York Sun, otherwise a neoCon rag, but they genuinely disagree with the Doc on Israel on a purely philosophical level and don't throw around the usual smears: they know exactly where he stands and why. And while they disagree, they respect the Doc for his principled consistency, unlike the rest of the AIPAC whore set at Fake News, hell, at all MSM outlets.

In fact, both Seth and Amity are downright smitten with our Gray Champion.

They're one of the few neocons who actually are truly economically aware. Lipsky even met Hayek personally in his last remaining days.

On a sidenote, I always thought her name sounded pretty funky!

"Amity Shlaes," sounds like name of a good ale, or a horror film, or a pseudonym for a horror writer!

But that's just me.D

Thanks for posting the article.

Check out NY Sun's recent OpEd on Dr. Paul vs. KRUDman 'debate' on Bloomberg:


NY Sun Ed. Bd: Dr. Paul leaves Krugman "in the Dust," during the recent Bloomberg 'Debate!'

Two things that stuck out about the whole Bloomberg 'debate'? Aside from Krugman's childish smirks and eye-rolls to sheer ignorance and arrogance?

1. Krugman was clueless about what the definition of money was, let alone the difference between money, vs. "currency."

We have an economy in which money is not just green pieces of paper with faces of dead presidents on them. Money is the result of the financial system. It includes a variety of assets. We’re not even quite sure where the line between money and non-money is — it’s kind of a continuum.

2. Krugman was clueless about what competing currencies are, as clearly illustrated when Dr. Paul began to speak about it, Krugman snidely retorted:

I have no idea what that’s about.

Of course, predictably politicos and wonks who've never researched to familiarize themselves with even the most rudimentary econ basics all were cheering Krugman on, like any other political partisan: just because he wears their political stripes.

For those who do at least have a rudimentary grasp of econ, it was hilariously one sided, as to who actually won the intellectual argument, as if Krugman abandoning the latter half of the segment to do damage control on his NYT blog wasn't telling enough.

Some econ Nobel laureate, eh? Talk about an award fast losing its relevance.

Now, NY Sun is mostly a neoCon rag, but the Editor in Chief Seth Lipsky really has a soft spot for the Doc, and in fact, the NY Sun often go out of their way to clarify that their difference of opinion on Israel is purely philosophical (that they admit they're statist on that issue, vs. pure 100% unadulterated principled stance of the Doc's), and know exactly where Dr. Paul stands, and do not attempt to broadstroke-smear his position as being "anti" anything.

And on econ? Almost completely on board with Dr. Paul; it probably is also due to the fact that Lipsky personally met Hayek, and intellectually understands much of Austrian economics, like Hayek's "competing currencies":

Ron Paul’s Clash With Paul Krugman Displays Power of Hayek Against Ideas of Keynes

An Illuminating Debate Erupts on Bloomberg TV

Editorial of The New York Sun | May 2, 2012

Congressman Ron Paul, in a rare head-to-head broadcast confrontation, went up against the Nobel laureate in economics Paul Krugman in an open debate over monetary policy. It was broadcast on the Bloomberg Television, moderated by Trish Regan. Not to put too fine a point on it, Ron Paul won the exchange, so much so that the cameras and moderators just drifted away from Mr. Krugman without so much as a fare-thee-well and left the field to the hero of the campaign for honest money.

The episode led Mr. Krugman to post on his Web log at the Times a complaint about the “uselessness” of face-to-face debates as a genre. He alleged that Dr. Paul got his facts wrong in respect of the post-World War II economy, but didn’t detail any errors. Here is how the Nobel laureate put it: “If Ron Paul got on TV and said ‘Gah gah goo goo debasement! theft!’ — which is a rough summary of what he actually did say — his supporters would say that he won the debate hands down; I don’t think my supporters are quite the same, but opinions may differ.”

We, for one, certainly do. The debate exhibited a brilliant display of the fundamental difference in the view of money. At one point, Professor Krugman offered this formulation: “We have an economy in which money is not just green pieces of paper with faces of dead presidents on them. Money is the result of the financial system. It includes a variety of assets. We’re not even quite sure where the line between money and non-money is — it’s kind of a continuum.”


For those who are interested further delving into the origins of gold as natural money, and what the very concept of "natural money" is, please check out the following:

IMHO it is one of the best primers on this topic. I certainly got a lot out of it. Hope it does the same for you, too.

Or, for a more comic scientific break down on how gold come to be the humanity's money for over 6000 years, check out the following recent post at ZeroHedge: http://www.zerohedge.com/news/why-did-gold-become-money

Predictions in due Time...

"Let it not be said that no one cared, that no one objected once it's realized that our liberties and wealth are in jeopardy." - Dr. Ronald Ernest Paul

Astonishing that Krugman

didn't know using gold and silver can land you in jail. The Bank of England certainly knows what the academicians have hidden from themselves. Gold is money. RP wins again, and so do we!

The tide is turning!

The tide is turning!