News that Senator Mitt Romney is going to vote with the Democrats against the confirmation of Judy Shelton as a governor of the Federal Reserve gives us a glimpse of why he lost the 2012 presidential election. He didn’t, it turns out, really believe in the Republican Party’s own platform, which had plenty to say about monetary policy and the Fed — thanks, partly, to a strong primary run by Congressman Ron Paul.
Indeed, at one point during the primaries, Dr. Paul was polling well against the sitting president, Barack Obama. We’ve always felt that was because Dr. Paul pressed the question of honest money. He plumped for his concept of “Audit of the Fed,” which would give Congress a way to look at all facets of the formation of monetary policy. Eventually, Audit the Fed would twice pass the House — and with broad bi-partisan support.
The 2012 primaries were the campaign in which Dr. Paul vowed to name as chairman of our central bank the celebrated editor of Grant’s Interest Rate Observer, James Grant. It may be that the Fed would have been too much of a lateral move for the editor of a newsletter like Grant’s. Though Dr. Paul failed to gain the nomination (always a long-shot), he helped win a platform with two significant monetary planks.
One plank endorsed his idea of “Audit the Fed.” That would have given Congress a mandate to begin asking questions about how the Fed operates in the age of fiat money, meaning money without any legal connection to gold or other specie. The second monetary plank endorsed the creation of a monetary commission in terms no less radical than anything Ms. Shelton has been advocating. The plank said:
“President Reagan, shortly after his inauguration, established a commission to consider the feasibility of a metallic basis for U.S. currency. The commission advised against such a move. Now, three decades later, as we face the task of cleaning up the wreckage of the current Administration's policies, we propose a similar commission to investigate possible ways to set a fixed value for the dollar.”
That’s the platform on which Mr. Romney ran. That he’s turned on such a learned, articulate, and collegial friend of sound money and GOP principles as Ms. Shelton says nothing about her and much about the senator. As Mr. Romney was campaigning in 2012, the dollar was in the midst of its historic collapse. Had Mr. Romney the vision to work with GOP monetary reformers, we felt at the time, he might have won.
Here we are, in any event, in the midst of another campaign taking place against the backdrop of the collapse in the value of the dollar. As we type it has plunged to less than an 1,885th of an ounce of gold. It seems Senator Romney has nothing to say about this, despite the platform on which he stood in 2012. The serious work of improving monetary policy and burnishing the dollar will fall to others — with, we hope, Ms. Shelton among them.