Gold Standard debate jumps the pond and finally reaches the UK

Regular readers will know that we’ve been highlighting for some time now just how mainstream the conversation about central banking and gold has become in the US. However we always had to lament the lack of conversation in the UK, well that looks like it has finally changed.

This week we saw not only a 30 minute BBC radio 4 program dedicated to topic of gold, it was followed up by a comprehensive piece on the BBC news site.

You can listen to the radio program here, which features regular GMS News guest poster Detlev Schlichter, and you can read the accompanying article here.

Whilst broadly speaking the coverage seems to be pretty fair, although all the old fallacies about gold were wheeled out by the same economists and ‘paper bugs’ who didn’t have a clue the financial crisis was coming . For example the old chestnut about falling prices being a bad thing – well if that were true how did the US go from being a brand new ‘nothing’ country in 1776 to the most powerful economic country on the planet by 1913 all the while ‘suffering’ under stable/falling prices. The idea that things getting cheaper is bad for the consumer or the entrepreneur doesn’t really stand up to simply thinking about it for more than a minute and applying some basic logic.

It was also good to hear the moral aspect of a government in collusion with central banks devaluing the value of people’s money – after all if anyone else ‘printed’ up money (on a much, much smaller scale no less) in their garage they would be tried criminally for counterfeit – so why is it any different when we let our government’s do it?

On this matter of gold and morality it’s probably worth reading what Alan Greenspan (the former head of the US central bank) had to say on the matter in a paper he wrote in 1966 titled “Gold and Economic Freedom”:

An almost hysterical antagonism toward the gold standard is one issue which unites statists of all persuasions. They seem to sense – perhaps more clearly and subtly than many consistent defenders of laissez-faire – that gold and economic freedom are inseparable, that the gold standard is an instrument of laissez-faire and that each implies and requires the other.

He’s entire paper is well worth a read – if for nothing else to see just how one person can completely forget his principled roots all in the name of ‘joining the club’.

Also the ‘paper bugs’ didn’t really address the actual points laid out by Detlev. He was saying something that we’ve been talking about for a couple of years – namely that the real debate is not about a ‘return’ to a gold standard, after all people should be no more forced to use gold anymore than they are forced to used paper money now. Rather people should just use what they want as money – when stated that way it’s rather difficult to find any real argument against this – are people too ‘stupid’ to choose for themselves?

‘Paper bug’ in chief Lord Lawson then concludes the piece with the best argument against government not gold, but we feel he didn’t realise he made it. He said:

“You can’t force a government to stay on gold, so therefore gold has no credibility,”

No, it is government that has no credibility not gold – and he’s dead right, governments can’t be trusted to be honest and stick to a gold standard and that is why Detlev (and us) are not arguing for a return to a gold standard. It is precisely because government’s can’t be trusted to stick to any monetary regime honestly that the real solution to this financial crisis lies in wrestling any and all control of what the people use as money away from government and putting it firmly into the hands of the people.

Perhaps the title of the BBC piece shouldn’t have been “Gold v paper money: Which should we trust more?” but rather “Gold v Government: Which should we trust more” – when stated correctly like that the answers becomes rather obvious rather quickly.

Related posts:

1. How to debate Paul Krugman
2. The short of the century – The bubble in government bonds is finally bursting
3. Krugman admits he lost debate with Ron Paul
4. Moody’s puts the UK and the Bank of England on ‘outlook negative’… Finally
5. UK Debt reaches new record

Link to this article: : http://www.goldmadesimplenews.com/gold/gold-standard-debate-jumps-the-pond-and-finally-reaches-the-uk-7232/

Posted by Thomas Paterson on Jul 6 2012. Filed under Analysis, Gold News, Markets. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.