Forbes’ Foresight

What is one to make of the fact that within minutes of Human Events publishing the prediction by Steve Forbes that America would return to a gold standard within five years, the Drudge Report put it up as its lead, banner headline? Is it that the logic of the gold standard is becoming clearer, even in the general interest press? Is it that moderately small newspapers, such as Human Events, can make a big difference? Is it that Matt Drudge has a keener nose for news on the monetary story than his competing editors? Or is it the fact that the Republican field of potential candidates is still at sea on the most important issue facing the economy?

The answer, by our lights, is all of the above. It’s not that Mr. Forbes has departed from his past views in respect of sound money (he hasn’t). Or that what he said would, in ordinary circumstances, seem newsworthy. All he said was that a return to the gold standard seems likely, in Human Events’ characterization of the story, “because that move would help the nation solve a variety of economic, fiscal, and monetary ills.” The magazine quoted Mr. Forbes as saying: “What seems astonishing today could become conventional wisdom in a short period of time.”

What is newsworthy is that Mr. Forbes is the only major Republican to mark this point in plain language and in a way that is informed by history. He predicts that a restoration of a gold standard would — again in the language of Human Events’ paraphrasing — “help to stabilize the value of the dollar, restore confidence among foreign investors in U.S. government bonds, and discourage reckless federal spending.” He pointed out in the interview that America “used gold as the basis for valuing the U.S. dollar successfully for roughly 180 years before President Richard Nixon embarked upon an experiment to end the practice in the 1970s that has contributed to a number of woes that the country is suffering from now.”

Mr. Forbes put into sharp relief the fact that fiat money is a digression from what has been the American system. Its advocates seek to give the impression that fiat money is the default position, standard operating procedure for America. On the contrary, fiat money is a bizarre experiment, like the Soviet communism, that deserves to be abandoned. It may have seemed logical to some when it was first toyed with during the Civil War, and we could make a case that war trumps all, particularly a war on which the very existence of our constitutional compact depended. But it is becoming clearer by the day that the 40-year experiment in fiat money on which we’ve been embarked since the presidency of Richard Nixon has been a failure.

The gold standard, in other words, is not a flakey idea. On the contrary, it is fiat money that is the flakey idea. A standard of sound money, defined in gold or silver, is the default monetary system for America, one that has served it in the vast majority of its years. It’s a sign of the times that it is big news when a public figure learned in history, such as Mr. Forbes, points this out and points out the logic of a gold standard reasserting itself. One of the points illuminated by Mr. Forbes is that these days the people are way ahead of the politicians. “People know that something is wrong with the dollar,” Forbes told Human Events. “You cannot trash your money without repercussions.” Too bad he is not running for president himself.