Should the U.S. return to the gold standard?; YES
On Labor Day union leaders criticized the Reagan administration. They should have been campaigning for the gold standard. The covenant between working Americans and their government must be underwritten by something more substantial than depreciating paper. Real work demands real money -- a dollar redeemable in a fixed weight of gold.
Paper money robs the working man of his wages and rewards wealthy and well-connected speculators.
But today the Federal Reserve System creates billions of paper dollars out of thin air. If the apple crop is much larger this year than last and demand remains the same, the price of apples will fall. The same is true of money. As the government prints more and more paper money to reward special interests and finance budget deficits, the value of the dollar falls. This process is called inflation.
But inflation is a moral problem as well as an economic one. Government contractors, large debtors (such as the government itself), spendthrifts, and speculators all benefit from inflation in the short run. Workers, savers, pensioners, and the poor are robbed, just as surely as if they had been mugged.
This immoral transfer of wealth, which totals hundreds of billions of dollars each year, violates our religious heritage, makes a mockery of honest work, and erodes our faith in constitutional government.
Since Richard Nixon cut the final tie to gold in 1971, Americans have lived with a dollar that is nothing but an impulse on a magnetic tape or a piece of inked paper. Its only backing is the promises of politicians and bureaucrats.
Since 1971 working people's real take-home pay has fallen almost 15 percent, and interest rates have put new homes and cars out of the reach of most Americans.
Americans can stop this destruction of their money and of the dreams of America's working people, but only with real money.
"We are now taught to believe," said Thomas Jefferson, "that magical tricks upon paper can produce as solid wealth as hard labor in the earth." The founder of the Democratic Party knew that hard work is the source of all economic value. Hard money, he said, "is the most perfect medium . . . because having intrinsic and universal value, it can never die in our hands. Paper money is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted."
Over the long run, the production of gold increases 1.5 to 2 percent a year, about the same as the real increase in economic growth. Even vast new discoveries, or radically new mining techniques, did not cause prices over time to go up by more than two to three percent a year.
For thousands of years working people freely chose gold as money, not because of abstract economic theories but because they knew it keeps its value.
When Franklin Roosevelt ended the domestic gold standard in 1933-34, the price level was no higher than it had been in George Washington's time. That kind of price stability comes only from gold.
If Americans seek justice for those who labor; if they hope to pass on a free society to their children; if they want to avoid economic disaster, they will establish the true gold standard.
Real money takes power away from politicians and bureaucrats, and places it in the hands of working people.
"Spurious paper currency is always . . . a loss to ghe laboring classes," said Andrew Jackson. Americans need money that will preserve wages, not destroy them. That means the gold standard.