Those of us who have been waiting for a politician to pick up on the monetary issue are perking up at Governor Palin’s demarche on the dollar. This came last week in a posting on her Facebook page, where she reacted to a report that Gulf oil producers were negotiating with Russia, China, Japan, and France to abandon the use of the dollar in pricing petroleum. She noted the report in the Wall Street Journal that Arab oil officials were denying the story, but reckoned that “even the possibility of such talk weakens the dollar and renews fears about its continued viability as an international reserve currency.” Then she pointed out that “a United Nations official called for a new global reserve currency to replace the dollar and end our ‘privilege’ to run up huge deficits.” Most importantly, she warned about the price of gold, which that day had hit a record in what she called a “response to fears about the weakened dollar.”

Time will tell, but what this suggests is that the former governor of Alaska is ahead of the rest of the undeclared contenders in 2012. The last president to run an avowedly weak dollar policy was Jimmy Carter. It may be that he saw the error of his ways, finally appointing Paul Volcker as chairman of the Federal Reserve. But it was really President Reagan who made a strong dollar emerge a central part of his economic policy. The dollar collapsed under President George W. Bush, a point these columns warned against over and over again, starting with an editorial called “The Bush Dollar”. The editorial was issued in December of 2005, just after James Grant pointed out that over the course of Mr. Bush’s presidency, the value of the dollar has plunged 46% in terms of the metal that is the greatest store of value — namely gold.

And it’s been downhill from there, which makes it doubly surprising that so few politicians have taken this issue to the hustings. Not that they haven’t been encouraged to do so. In March, as the 2008 campaign was moving into high gear, Lawrence Kudlow issued a memorable column calling for Senator McCain to “get behind king dollar.” He warned that the greenback was in a free fall, a “disorderly drop.” And he made the point that, although he was starting, for the first time in a decade, to worry about inflation, there’s what he called “another side to the dollar story” — that a collapsing dollar is a “symbol of American decline.” It was a prescient point. Little more than a year later, the dollar has collapsed to below 1,000^th of an ounce of gold — it was at a 265^th of an ounce of gold when President Bush acceded, and the emerging story is precisely of American decline.

So Mrs. Palin’s comments suggest she’s savvier than many give her credit for being. No sooner did she issue her warning about the dollar than Reuters found a number of Republicans declaring she was right. The coming seasons will be a time to keep in mind that the worry is less how the dollar compares to other scrip, no matter which government is printing it. The indicator to watch is the price of gold. To those who say one can’t have strong growth and a robust economy while the dollar is strengthening in terms of gold, we would commend a closer look at the Reagan years and even the Clinton years that were powered by Reagan’s great supply-side reforms. It is true that the only politician who has been campaigning on this issue, Ron Paul, failed to prosper at the polls. We would argue that had less to do with his monetary policy than other issues, the war among them, on which he has been in error. But maybe he should have been a bidder for that famous lunch with the former Alaska governor. We’re not ready to make endorsements, but Palin and Paul could make a whale of a ticket.