Lucille
06-11-2012, 01:27 PM
Our would-be Fed Chairman reviewed two books for the WSJ this weekend.
A Cure for What Ails Us
It is not enough to encourage enterprise and limit regulation—we need a fixed system of value. (http://online.wsj.com/article/SB10001424052702303830204577447323281213262.html)
Bailouts, bear markets and joblessness will surely put capitalism on the November ballot. How do you like your enterprise, Mr. and Ms. American Voter—free or stifled or a little something in between?
The 2012 election promises a clear ideological divide. Mitt Romney may be no Ron Paul, but neither is there any mistaking him for Barack Obama. The former private-equity titan will likely take his stand with a kind of almost-free-enterprise—the welfare state as we knew it before ObamaCare, so-called quantitative easing and the enterprise-thwarting dread that someone in Washington is dreaming up even costlier experiments than the ones that have already failed.
"Capitalism" is the epithet that 19th-century collectivists foisted on the economic system of private property and the invisible hand. It's a name that wins no friends for the cause of enterprise. A socialist, supposedly, cares for society. A capitalist ostensibly loves only his stocks and steel mills and strikebreakers. The PR battle was almost lost at the naming.
[...]
Neither Mr. Meltzer nor Mr. Zingales is a fan of the Federal Reserve—Mr. Meltzer is an especially withering critic—but neither makes a fundamental case against the pure paper dollar, the Fed's stock in trade. Mr. Meltzer declares that the principal alternative to fiat money, the gold standard, has no place in a modern economy "because democratic governments, reflecting voters' concerns, prefer now to keep unemployment rates low rather than stabilize prices via the price of gold." The alleged trade-off between stable prices and unemployment under a gold standard, however, he asserts but does not prove. Nor does he pause to note that, under the Bernanke standard, America's unemployment rate has topped 8% for 3½ years running. For no potential employer is uncertainty as to the timing of the next adventure in money printing a confidence-builder.
[...]
Currency convertible into gold of the legal specifications is a vital protection against economic manipulation by the government. As long as currencies are convertible, governments cannot easily tamper with the price of goods, and therefore the wage standards of the country. They cannot easily confiscate the savings of the people by manipulation of inflation and deflation. . . . Once free of convertible standards, the executives of every "managed-currency" country had gone on a spree of government spending, and the people thereby lost control of the public purse—their first defense against tyranny.
Mr. Meltzer and Mr. Zingales—and Mr. Romney, too—pledge their fealty to the ideal of the free market. But each accepts a monetary system that replaces a fixed and objective standard of value with a changeable and subjective one. Do you wonder how to restore monetary power in the people and put a spring back in the step of the capitalists? "The True Gold Standard," by Lewis E. Lehrman, published in 2011, is available on Amazon.
—Mr. Grant is the editor of Grant's Interest Rate Observer (http://www.grantspub.com/).
A Cure for What Ails Us
It is not enough to encourage enterprise and limit regulation—we need a fixed system of value. (http://online.wsj.com/article/SB10001424052702303830204577447323281213262.html)
Bailouts, bear markets and joblessness will surely put capitalism on the November ballot. How do you like your enterprise, Mr. and Ms. American Voter—free or stifled or a little something in between?
The 2012 election promises a clear ideological divide. Mitt Romney may be no Ron Paul, but neither is there any mistaking him for Barack Obama. The former private-equity titan will likely take his stand with a kind of almost-free-enterprise—the welfare state as we knew it before ObamaCare, so-called quantitative easing and the enterprise-thwarting dread that someone in Washington is dreaming up even costlier experiments than the ones that have already failed.
"Capitalism" is the epithet that 19th-century collectivists foisted on the economic system of private property and the invisible hand. It's a name that wins no friends for the cause of enterprise. A socialist, supposedly, cares for society. A capitalist ostensibly loves only his stocks and steel mills and strikebreakers. The PR battle was almost lost at the naming.
[...]
Neither Mr. Meltzer nor Mr. Zingales is a fan of the Federal Reserve—Mr. Meltzer is an especially withering critic—but neither makes a fundamental case against the pure paper dollar, the Fed's stock in trade. Mr. Meltzer declares that the principal alternative to fiat money, the gold standard, has no place in a modern economy "because democratic governments, reflecting voters' concerns, prefer now to keep unemployment rates low rather than stabilize prices via the price of gold." The alleged trade-off between stable prices and unemployment under a gold standard, however, he asserts but does not prove. Nor does he pause to note that, under the Bernanke standard, America's unemployment rate has topped 8% for 3½ years running. For no potential employer is uncertainty as to the timing of the next adventure in money printing a confidence-builder.
[...]
Currency convertible into gold of the legal specifications is a vital protection against economic manipulation by the government. As long as currencies are convertible, governments cannot easily tamper with the price of goods, and therefore the wage standards of the country. They cannot easily confiscate the savings of the people by manipulation of inflation and deflation. . . . Once free of convertible standards, the executives of every "managed-currency" country had gone on a spree of government spending, and the people thereby lost control of the public purse—their first defense against tyranny.
Mr. Meltzer and Mr. Zingales—and Mr. Romney, too—pledge their fealty to the ideal of the free market. But each accepts a monetary system that replaces a fixed and objective standard of value with a changeable and subjective one. Do you wonder how to restore monetary power in the people and put a spring back in the step of the capitalists? "The True Gold Standard," by Lewis E. Lehrman, published in 2011, is available on Amazon.
—Mr. Grant is the editor of Grant's Interest Rate Observer (http://www.grantspub.com/).