The latest scoop on the Federal Reserve is what a unifying figure President Trump turns out to be. He wants our central bank to hold down interest rates, and look who’s with him: the Fed chairman, Jerome Powell, who is now signalling rate cuts; Mr. Trump’s latest candidate for a Fed governorship, Judy Shelton; the Financial Times, albeit wishy-washally; the increasingly Trumpist New York Times; and — drum roll — its Nobel laureate, Paul Krugman.
How rich with ironies. This struck us while reading Mr. Krugman’s latest column, “Goldbugs for Trump.” He reckons there’s “a real economic argument for rate cuts,” but accuses the goldbugs of having “sold their principles a long time ago.” That is, he’s angry at himself for agreeing with Mr. Trump, Ms. Shelton, and their allies. He’s in a devil of a spot, too. We’d suggest the lion has laid down with the lamb, save for the fact that the Sun isn’t lying down with anyone.
By our lights, Mr. Krugman is too hung up on economists. He makes a megillah out of the survey by the University of Chicago’s Booth School showing there’s no support for the gold standard in a group of economists who don’t support a gold standard. There are, of course, economists who do support the gold standard. Booth just doesn’t include them in its focus group. So there is, concludes the amazed Mr. Krugman, “literally, zero support for the gold standard.”
Give him the Nobel Prize for Distinguished Tautology. For our part, we don’t look at the dollar as purely — or even primarily — an economic problem. We see it as a political, constitutional, and, ultimately, moral matter. The Framers of the Constitution understood this. To whom, after all, did they grant the power to coin money and regulate the value thereof, and of foreign coin? They could have granted it to the economists. Or to Mr. Krugman.
Blamed, though, if they didn’t turn around and instead grant the monetary power to the most political institution in the entire constitutional construct — the Congress. It’s the most complex part of our system, the one that most often must face the voters and the states, the one that holds the sole power to borrow money and the sole power to spend it. Plus the sole power to tax. And the sole power to regulate commerce with foreign states and among the several states.
The New York Sun doesn’t aspire to set interest rates — even if the Congress (which, again, has the sole power to spend and borrow) is racking up annual deficits that could soon top a trillion one-dollar federal reserve notes that not a single member of Congress has bothered to define. That’s a point underlined last week by James Grant, writing in the Journal under the headline, “The Fed Could Use a Golden Rule.”
No wonder the Trump standard is proving to be so unifying. If the 45th is more critical of the Fed than other presidents, maybe it’s because he’s thought more about debt, credit, and money than previous presidents. Americans, though, are not dumb. They know that since we abandoned the Bretton Woods system and let economists manage the dollar, the value of the greenback has plunged more than 97%. How could any single president do worse?