Zoellick Tossed Under the Bus
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
The only thing we can think of to explain the behavior of the Financial Times this week is that news travels slowly across the Atlantic. It’s almost like the days when the English news wires sent out from the Irish coast people in rowboats to pick up pouches of mail thrown overboard from vessels returning from America so they could get news to the London markets ahead of the steamers, even if by then the news was well behind the actual events on the battlefields of the Civil War.
On Sunday the editors of the Financial Times took a break from their tea to rush out a dispatch by the president of the World Bank, Robert Zoellick, suggesting that there might, after all, be a role for gold in a new monetary system. The FT’s redakzia was so startled by the uproar that this morning they ran out an editorial saying that Mr. Zoellick didn’t know what he was talking about and that, indeed, the gold standard is, like Keynes once pronounced, a “barbarous relic.” The FT declared that the very article it had just issued under Mr. Zoellick’s name should be ignored.
The real story is that the FT has fallen behind the news. The edge of the debate that is gathering for the 112th Congress is not about whether the gold standard is or is not a barbarous relic. The drivers of this debate — Ron Paul, Sarah Palin, Paul Ryan, Michelle Bachman, to name but a few of the established or rising politicians who regret that the Congress has stood mute as the value of the greenback has collapsed to below a 1,400th of an ounce of gold — are not worried about Mr. Keynes and the Financial Times. They are worried about what the United States Constitution requires.
Not only what it requires but what it prohibits, or, as Lawrence Parks of the Foundation for Monetary Education likes to phrase it, the monetary powers and disabilities of the Congress. It is no longer news that the current and recent congresses, the current and previous administrations, and the Federal Reserve have failed in the management of America’s dollar. The communist Chinese understand this, the United Nations understands this, and even, it turns out, the World Bank now understands this. As do the people who shop for groceries and gasoline, as Mrs. Palin pointed out this week.
The edge of the monetary story today is the beginning of a debate far more fundamental than the one the FT is shying away from. Well more than half of the Congress wants an audit of the Federal Reserve. It is an issue that has moved way beyond Ron Paul’s office and crossed the aisle and is now endorsed by large blocs in both parties. What that means is that the Congress of the United States does not trust the Fed. It’s not a personal quarrel with Chairman Bernanke. It’s an institutional, even a constitutional issue. Dr. Paul, for his part, would be happy to see the Fed abolished altogether.
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We would not suggest that such a step or other elements of what might be called a purists’ agenda is going to happen overnight (or even in the coming Congress). Nor would we suggest that every reformer is on the same page. But we are in a period where even Alan Greenspan is reminding the world, “Fiat money has no place to go but gold,” as he put it the other day at the Council on Foreign Relations. The issue is resonating more widely than the allegedly sophisticated publications seem to appreciate. One can get more good headlines on the monetary crisis on the home page of the Drudge Report than on the Financial Times itself. The Wall Street Journal is racing ahead of its European rival, issuing this morning an important editorial on Mrs. Palin and Mr. Zoellick. It followed up at mid-day with a Web broadcast by the newspaper’s editorial page editor, Paul Gigot, who credited Mrs. Palin for getting out ahead of the competing politicians on a fundamental point — the “link between prosperity and sound money.” Maybe Mr. Zoellick will turn to the Journal to publish his next piece. It’s unlikely he’d get attacked the next day by the newspaper that published him.