Mises Daily Articles
Dr. Paul's Case for Gold
[Foreword to the second edition of The Case for Gold (2011)]
This country had the chance to avoid the disastrous meltdown of 2008 and following, the one that has led to the nationalization of industries, the creation of oceans of paper money, and the destruction of so many American dreams. The answer that might have been is the one you hold in your hands: the minority report of the US Gold Commission of 1982, written by Ron Paul and signed by Lewis E. Lehrman. It provides an outstanding history, wonderful theoretical analytics, and a proposal for the return of sound money, which is gold.
Alas, it was the minority report and therefore killed by political forces. Of course, the fix was in from the beginning. The commission only came to exist in the first place as payoff to certain "goldbugs" in the Republican Party in the those years. Ronald Reagan was one of them. So his influence was part of the reason the Commission was created. But it wasn't created to institute a gold standard. It was created to bury the idea once and for all.
Ron Paul wouldn't let it happen. The result was this book, which remains a mighty case for sound money and the blessings that change would bring to this country. A gold currency would restore economic stability and growth. It would eliminate unemployment. It would force government to spend only what it can collect in taxes. It would rein in the welfare state and the warfare state. It would give the people control of money again. It would restore what we used to call freedom, which is a core of social and civic life that is impenetrable and inaccessible to government planners.
With a gold standard, the Fed could disappear. The banking industry would become an industry like any other, subject to the profit and loss test and given no guaranteed bailouts at taxpayer expense. The financial industry would be forced to surrender its love of socialism (for losses, not gains) and become honest again. We would all start living within our means and thriving off private wealth rather than depending on the public sector to save us.
Trade with other nations would benefit. Protectionist wars rooted in currency manipulation would cease. Policy options in Washington would be mercifully restricted to only what Washington could afford to do and afford to enforce. Vast swaths of the public sector as we know it would have to just pack up and go home. This would be the greatest blessing visited on this country in a century. But can you see why Washington isn't interested? It has nothing to do with disagreements over economic theory. It is all about who has power in society. Paper money gives power to tyrants. Sound money — that is gold — gives power to the people and the free markets they control.
So, yes, we should have listened to Ron in 1982. The thing is that he — wisely and bravely — never stopped talking about this issue. It turns out that this book, this minority report, is the work of a prophet. It tells the truth and shows the way. It should be our manifesto again. This timeless statement on behalf of economic truth can be our guide.
They didn't listen then. But maybe they'll listen now. We need monetary freedom more than anything else. The way digital markets are advancing, it might come about with or without Washington's permission. As Ron has always known, paper money cannot last. Either it has to go, or the American dream has to go. They cannot forever live side by side.