Tuesday, September 4, 2012

Another Gold-Hater Emerges

Not surprising it's Bruce Bartlett, who held senior policy roles in the Reagan and George H.W. Bush administrations. Apparently, he was pretty sound on economics at one time, people tell me who knew him during a time, way back, when he was a staff member to Ron Paul.

But, he has now come out of the closet completely as a gold-hater, just as his fellow NYT columnist, Tyler Cowen has done.

In today's NYT, he writes:

The Gold Commission issued its report in March 1982. It said that most members of the commission “believe that a return to the gold standard is not desirable.” Of the commission members, only Mr. Lehrman and Mr. Paul dissented and recommended its re-establishment. 
Even before that, however, the Reagan administration had signaled its negative position on any return to a gold standard in the Economic Report of the President, issued in February (starting on Page 69). The gist of its objection was that while a gold standard provided stable purchasing power over long periods of time, that was only because inflations were subsequently offset with debilitating deflations. As a consequence, there were greater economic instabilities, higher unemployment and longer recessions during the gold-standard era.

See John Carney on his excellent report on why the gold standard is not about stable prices.

As for all these supposed, regular economic instabilities when there is a gold standard.  I would like Bartlett to name some. He knows better. Any instability was the result of money printing beyond what could have occurred under a true gold standard. Bartlett is turning into quite the propagandist.

Bartlett then continues his propaganda with this:
Economists today generally believe that the gold standard exacerbated the Great Depression. They note that those countries that went off it first in the 1930s were the first to recover. A survey of a panel of 41 prominent economists earlier this year by the University of Chicago business school found no support for a gold standard, including by those who had served in Republican administrations, including Edward P. Lazear of Stanford and Richard Schmalensee of the Massachusetts Institute of Technology.
Puhleeze, the Great Depression was caused by massive money printing during the 1920's, followed by global currency manipulations. Further, it appears that Bartlett has forgotten that FDR via  Executive Order 6102 banned Americans from owning gold in 1933  Just what the hell gold standard does Bartlett think was going on domestically to exacerbate the Great Depression, when Americans were threatened with jail time for owning gold coins, gold bullion and gold certificates?  There were global money manipulations going on, but this had nothing to with a real gold standard. Americans were prohibited from owning gold!

Or does Bartlett now think the Great Depression ended in 1933? Even the damn rag where he spits this stuff out admits the Great Depression went a decade beyond 1933:
Brightening economic prospects were dashed in 1937 by a deep recession that lasted from that fall through most of 1938...Despite the New Deal’s many measures and their alleviation of the worst effects of the Great Depression, it was the humming factories that supplied the American war effort that finally brought the Depression to a close. And it was not until 1954 that the stock market regained its pre-Depression levels. 
(And as for World War II getting the factories "humming", see Robert Higgs: Wartime Prosperity? A Reassessment of the U.S. Economy in the 1940s )

Bartlett then tells us amazingly, as the Fed appears ready to launch another money printing campaign, that deflation is the problem:
But today, there is no inflation to speak of and what little there is is heading downward toward deflation, as James D. Hamilton of the University of California, San Diego, noted in a Sept. 1 blog post. Like me, he is puzzled that there is any support for the gold standard under current economic conditions.
Does Bartlett have any idea of the government debt overhang that will cause interest rates to soar and that the most likely result is that, because the U.S. is not on a gold standard, the Fed will print at will to prop up the debt with accompanying massive price inflation?

After then quoting some nutjob who doesn't even understand the gold standard, Bartlett madly concludes:
It would appear, therefore, that if the goal is to reduce governmental influence in monetary affairs and reduce financial instability, a gold standard would move in the opposite direction on both counts.
Absolutely mad.


  1. "An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions."
    -Alan Greenspan

    Yeah I know Greenspan sucks, but his gold article is classic.

  2. Bartlett knows better. Bartlett in 1980: