The story that sticks in our mind this week is the prediction by John Paulson that gold could hit $4,000. We first read of his comments on a Web site called Goldalert.com, which reported that the hedge fund multibillionaire had recently told a luncheon group at private club in New York that he reckoned gold, which at the time was a few dollars below $1,300, “could hit $2,400 based only on monetary expansion,” as Goldalert paraphrased him, “and as high as $4,000 per ounce based on a projected overshoot.” Goldalert said that Mr. Paulson noted that 80% of his assets are denominated in gold. Robert Lenzner of Forbes, who first reported Mr. Paulson’s remarks, said Mr. Paulson told “a standing room only crowd” at the University Club that, in Mr. Lenzner’s wording, “double-digit inflation is about to rear its ugly head by 2012, killing the bond market, and restoring strength to equities and gold.”

No doubt what riveted the town about Mr. Paulson’s reported remarks is the implication for investment strategy. An investor is what he is, after all, and based on his record, he’s a man worth paying attention to. What interests these columns, however, is less the investment advice (though we’re plenty interested in that) than the drama of political economy. It was only three years ago, in July 2007, that Congressman Ron Paul had his famous exchange with the Federal Reserve chairman, Ben Bernanke. In that exchange, Mr. Paul asked whether the chairman could foresee a crisis over the dollar like the one in 1979 and 1980? That season the value of one of the Federal Reserve notes that Mr. Bernanke was issuing in the name of the United States had plunged to an 850th of an ounce gold.

“I’m not anticipating a problem like ’79, ’80. No,” Mr. Bernanke had responded. At the time Mr. Paul popped that question, in July 2007, the dollar was worth a 666th of an ounce of gold. By November, when we wrote an editorial about the exchange, its value had evaporated further, to the levels it had sunk in early 1980. We had a new Speaker in Congress, and we had a presidential campaign heating up, and yet no major figure in either party — save for Dr. Paul — was addressing the collapse in the value of the national currency. Now here we are only three years later, the value of a dollar has plunged to less than a 1,300th of an ounce of gold, and the talk in the heart of Manhattan is not just $2,000 gold but $4,000 gold. It’s not coming from gold bugs and flat earth types but from one of our most successful investors in the land.

It’s amazing to us that this story is rarely put up on the front pages of our general interest press, though some of the shrewdest editors on the Web have begun fronting the gold story (Matt Drudge sometimes changes headlines several times a day as the dollar sinks). It is true that Dr. Paul tried to make this an issue in the 2008 campaign, and failed to prosper. And it is true that if interest rates start to move up, we could see gold start to come down. But the question that vexes us is to what degree is the lack of a constitutional dollar that is defined the way the writers of the Constitution expected it to be defined — as a specified number* of grains of silver — responsible for, or contributing to, our economic troubles to begin with.

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And who is going to pick up this issue in the political arena? Governor Palin is one of the few politicians to voice concern about the plunging value of the dollar, which she did when she visited Hong Kong. In June, Congressman Paul Ryan pressed Chairman Bernanke about the gold value of the dollar, to which Mr. Bernanke replied, “I don’t fully understand the movements in the gold price.” It is Congress that is the body that is constitutionally responsible for coining money and regulating its value. There is at least the possibility that in a matter of weeks control of the House and maybe even the Senate is going be revoked from the Democrats and returned to the Republicans. Will the fact that serious people are warning about $4,000 gold be enough to shock the new Congress into looking at repairing a monetary system as a first step toward returning our economy to the path of stable growth?

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*371 1/4, according to the Coinage Act of 1792.