Back to the gold standard?
Congressman Alex Mooney (R-W.Va.) has reintroduced legislation to make a U.S. dollar convertible into a fixed weight of gold. When he first introduced the bill in the 115th Congress, Congressman Mooney noted that it had been the first attempt to return our nation to backing our money by gold since Jack Kemp's Gold Standard Act of 1984.
The bill's introduction carries added weight this year after President Trump announced his intention to nominate gold standard sympathizers Stephen Moore and Herman Cain to the Federal Reserve Board of Governors. While monetary policy is not a subject currently receiving much consideration in the halls of Congress, the Trump administration has sent signals that it is an issue on its radar by putting forth such unconventional, sound-money nominees.
Congressman Mooney's gold standard legislation has the potential to renew discussion on monetary policy in Congress. If so, we are all the better for it. The Trump administration has signaled that it wants to see real reforms to ensure a stable dollar, and it's time Congress joins the administration in that discussion rather than taking potshots at Trump's nominees, as Senator Romney did.
While economic growth has hovered around 3% under President Trump, under the gold standard, the United States achieved fairly consistent 4% economic growth. As Peter Ferrara has noted, that level of economic growth doubles our economy, incomes, and standard of living every 17 years. But in the meantime, the St. Louis Fed is predicting that economic growth will lag to about half that level in 2019.
Writing for Forbes, Nathan Lewis has noted that nearly two centuries of American adherence to the gold standard created both a stable currency and one of the wealthiest nations in history. He further noted shortly after Congressman Mooney first introduced the gold standard bill in 2018 that "[t]he dollar's value has declined to one-thirtieth of what it was in 1970, compared to gold, with predictable consequences." Coupled with low taxes, a stable dollar will facilitate a "Magic Formula" for soaring economic growth.
Our dollar's value has collapsed since Nixon took us off the gold standard in 1971. According to Lewis, it stands to fall to "no more than a thousandth of its value during the Kennedy administration" in the next fifty years. Is the status quo of our monetary policy an impediment to economic growth? That discussion is long overdue. Congressman Mooney was spot on in his analysis that "[t]he Fed has the impossible task of guessing the market's demand in real time. Its performance worsened in the 2000s because the Fed began to grade itself by how its money creation boosted the financial markets."
With Congressman Mooney reintroducing this bill at a time when our president appears to be on a crusade to deliver real, meaningful reforms that will make the Fed more transparent, accountable, and pro-growth, Mooney has provided the fuel needed for Congress to have its discussion on monetary policy. It's time for Congress to match the Trump administration's commitment to a stable dollar.
Nathan Williamson is an activist who has worked for multiple conservative organizations.