Does This Make A Difference?

Because of circumstances beyond my control, I anticipated being away from keyboard for a few days. However, today I found this item on the Drudge Report and I made time for a short comment: Republicans eye return to gold standard...

The link connects to an article at CNBC.com that says:

The gold standard has returned to mainstream U.S. politics for the first time in 30 years, with a “gold commission” set to become part of official Republican party policy.

If this is true and not merely a hollow sop to Ron Paul and company, is it enough to make a difference to libertarian voters who detest the Republican Party and refuse to vote for Mitt Romney?

I know party platforms are notoriously worthless and non-binding documents. On the other hand, they do reflect the opinions of party regulars who take platforms seriously. When I was a big "L" libertarian, we debated the party platform in earnest. The debates often became heated.

Therefore, the fact that such a plank (supporting a "gold commission") is included in the Republican Party platform is huge to me.

I don't subscribe to the theory that the Republican Party is corrupt and unchangeable as an institution. Institutions and organizations do not have an existence separate from the individuals that comprise them. When the hearts and minds of individual Republicans change, the Party can change. The "gold commission" plank may be the first sign of change.

Is it enough to change the vote of hard-core libertarians in November? We must wait and see.

As an added aside, it's curious the way the authors of the subject article report on the effects of a change to the gold standard:

Any commission on a return to the gold standard would have to address a host of theoretical, empirical and practical issues.

Inflation has remained under control in recent years, despite claims that expansion of the Fed’s balance sheet would lead to runaway price rises, while gold has been highly volatile. The price of the metal is up by more than 500 per cent in dollar terms over the past decade.

These comments and their implications, of course, are total nonsense and reflect complete ignorance of Austrian monetary theory. Gold is up in terms of the dollar, which is the very currency the Fed controls and has been printing as if there were no tomorrow. And to assert that inflation "has remained under control in recent years" is to rely on government measures of inflation which we all know are manipulated. Anyone who gets a paycheck and buys food, shelter, clothing and virtually any other good or service knows prices are rising with abandon.

The article also states:

A return to a fixed money supply would also remove the central bank’s ability to offset demand shocks by varying interest rates. That could mean a more volatile economy and higher average unemployment over time.

This comment is so bizarre, one barely knows where to begin. In Austrian monetary theory with regard to a gold standard, monetary authorities would not fiddle with the printing press in a vain attempt to "offset" "demand shocks." The demand for gold and the supply of gold -- both as money to hold and for commercial purposes -- would be determined by individuals trading in the market. Interest rates would also be determined by the market, not as a reaction to the demand and supply of printing-press dollars, but as a reaction to the time preference of individuals in the market, i.e., their demand for future goods as opposed to present goods.

Moreover, the net effect over time of a gold standard would be less volatility in the marketplace and a tendency toward full employment.

Be back with regular posts soon...