Will Trump Take Inflation Seriously?

President Trump, we’d like to think, is starting to take seriously the risk to his presidency posed by inflation. “We’re fighting every day to get the prices down,” he averred today at the White House. “We have to get the prices down, not the inflation down, the prices down,” he added. That appears to reflect the realization that even as the rate of inflation has slowed from its peak under President Biden, it’s the cumulative impact of price increases that rankles.This is a good moment to mark the mistake of 1953 as President Eisenhower took office. He ran on a platform of restoring the gold standard, abrogated by FDR some 20 years before. The GOP call was met with a condescending editorial in Barron’s warning that the gold standard “was not a game of solitaire” and that America had to wait for global economic stability. “When, if ever, will all the world have a stable economy?” was the Wall Street Journal’s reply.In the end, Ike never did follow through on the gold pledge. The lesson then was that, as the Journal foresaw, restoring the dollar’s gold backing — its convertibility on demand for a fixed weight of the monetary metal — was real reform. Today, Mr. Trump has a chance to lead on the inflation challenge by moving on monetary reform. After all, the root cause of today’s price inflation is the fiat currency regime that in the 1970s ended the dollar’s link to gold.While it’s a positive step for Mr. Trump to acknowledge inflation’s persistence, missing from his remarks was any mention of gold. It’s no coincidence that as prices surged some 20 percent under President Biden’s tenure, the gold value of the dollar was collapsing. In recent weeks the dollar sank below a 2,900th of an ounce of gold, the true measure of monetary value. No wonder that it takes more and more of our debased dollars to purchase goods and services.By contrast, prices were steady under the gold standard. Between 1792 and 1913, prices in America rose by but 0.2 percent a year, on average. That’s partly a result of the discipline of gold convertibility, which constrained prices around the dollar’s fixed value in gold. In the fiat money era, prices only move in one direction — higher. Even if the pace of inflation slows, the prices don’t fall. Hence Mr. Trump’s lament today that “the inflation is stopping slowly.”Mr. Trump pins the blame in part on “high interest rates and other problems we inherited.” These include his predecessor’s policies of overspending, overregulating, and overtaxing. At the same time, from the vantage point of the voters, the ownership of that problem shifted on January 20 to Mr. Trump. Reuters says inflation motivated 58 percent of voters on November 5, yet only 32 percent now approve of Mr. Trump’s job on the issue. That’s shocking.Consumer confidence, too, is slipping, in part based on fears over price increases. The president’s remarks — along with measures to curb the price of eggs — suggest that he grasps the gravity of inflation. Has Mr. Trump learned from Eisenhower’s mistake in 1953? If so, that could be the opening for a long-overdue campaign for monetary reform. A good starting point would be a commission to weigh the record of America’s move to fiat money.Mr. Trump has already committed to joining Elon Musk’s visit to Fort Knox “to see if the gold is still there.” Verifying that fact could prove a step, if only a step, on the path toward restoring the dollar’s convertibility into gold at a rate fixed by law. One doesn’t want to understate the scale of the challenge. Restoring a gold standard would require, among other things, balancing budgets and slimming trade deficits. Yet it’s the surest way to defeat inflation.The reason we keep banging on about the chance for monetary reform is that we think Mr. Trump has the force of personality and the savvy to take on the country’s biggest issue. It’s a titanic issue in its own right, and it’s the one that voters care about the most, per the polls during the campaign. Can Mr. Trump rise to the occasion? It would require strategic speeches in the months ahead to rally public opinion, and the Congress that holds the monetary powers.

Will Trump Take Inflation Seriously?

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