Bill Kristol, Gold Bug
One of the really shocking things about the modern American conservative movement is that it contains many influential figures whose thinking about public policy is of lower quality than Bill Kristol’s. His latest notion is that we should side with China against Ben Bernanke and then adopt a gold standard:
China hawks and American hegemonists (I’m both) will be tempted to jump on this statement as a challenge to the U.S., which in a way it is. But it’s worth overcoming for a minute our (justified) distaste for the Chinese regime, and pausing to ask this: Isn’t Hu in this one respect right? And does the current international currency system of fiat money, with the U.S. as the reserve currency, serve U.S. or world interests?
And it’s worth further asking–as more and more people are beginning to ask–whether a modernized international gold standard, which anchors currencies to a standard outside government manipulation, wouldn’t better serve the interests of free and limited government both at home and abroad. After all, it’s the dollar’s status as a reserve currency that has allowed the U.S. government to amass huge debts, debts which the legislatively imposed debt ceiling has been unsuccessful in limiting. Fiat currency seems to be related to bloated and unlimited government, and to speculative bubbles, and to international instability. Do we just to have to live with this, or simply hope for better Fed chairmen?
If Kristol seriously thinks there were no asset price bubbles or market panics before FDR took us off the gold standard, then he really needs to think harder. Like how did FDR get elected? And why did he take us off the gold standard?
But beyond the specific facts, it’s the logical structure of the argument that’s insane. Economic growth is a key predicate for an expansive welfare stare. So it’s completely true that if you just started throwing out the key institutional features of modern market economies that you’d strange big government. But you’d be strangling big government by destroying the economy. Why do this? It’s like economic conservatism as a religion, with small government a totem to worship at.