Right on The Money At the Cato Institute: A Velvet Underground Event?

As the gold standard continues to emerge as a respectable even compelling public policy option competing schools of thought emerge.  These range from the great Ron Pauls (and APIA chairman Sean Fielers) prescription for choice in currencies a la Hayek to Lehrmans prescription of the classical gold standard a la Americas statesmen to Forbess proposal of a goldless gold standard."

Lewis E. Lehrman founder and chairman of The Lehrman Institute (with which this columnist has a professional association as editor of the Institutes web-publication) recently presented to acclaim at the Cato Institute in Washington DC his latest book Money Gold and History.  The Hayek auditorium was well filled. C-SPAN taped the event for broadcast.  Cato livestreamed it (archived and available here).

This was no ordinary event.  It may in retrospect be seen as the gold standards Woodstock.  Perhaps a more apt metaphor is the Velvet Undergrounds first record.  As Brian Eno famously observed I was talking to Lou Reed the other day and he said that the first Velvet Underground record sold only 30000 copies in the first five years. … I mean that record was such an important record for so many people. I think everyone who bought one of those 30000 copies started a band!"  Cato staged what may prove to have been something comparably seminal.

Some of the most eminent voices for monetary reform today all justly to be considered part of monetary policys Velvet Underground" participated.   Present were Catos president John Allison Catos Director of Financial Regulation Studies Mark Calabria moderator; Catos Vice President for Monetary Studies Prof. James Dorn; Cato senior fellow (and editor of Forbes.com Opinions and RealClearMarkets) John Tamny; Cato senior fellow Alan Reynolds (who among many other notable accomplishments coined the term Supply Side economics"); and Catos director of government affairs Laura Odato.

Also prominent were the eminent Dr. Warren Coats; Jeffrey Bell policy director and Rich Danker economics director of American Principles in Action (with which this columnist has a professional association); The Ethics and Public Policy Centers John Mueller; Atlas Economic Research Foundations Judy Shelton; Mercatus Centers program manager for its Financial Markets Working Group Lydia Mashburn; Ron Pauls Campaign for Liberty vice president for policy Norman Singleton; Howard Segermark Director of the Committee for Monetary Research and Education; Ohio-based monetary reform advocate Rich Lowrie; and Jonathan Decker managing editor of thesupplyside.  Key Congressional staff members and other policy thought leaders attended as well.  (Missing but surely there by proxy or in spirit were gold standard advocates Steve Forbes APIA Chairman Sean Fieler and Prof. Lawrence White of George Mason University.)

From the Fourth Estate Addison Wiggin of the parent to the Laissez Faire Book Club (which is making Lehrmans earlier success destime The True Gold Standard available to its members) introduced Lehrman. Also present were R. Emmett Tyrrell founder and editor of The American Spectator and William Kristol founder and editor of The Weekly Standard.

It was striking to see an iconic conservative lamb Tyrrell and an iconic neoconservative lamb Kristol (not to mention an iconic social conservative lamb Bell) laying down with so many iconic libertarian lions.  This is a sign if not exactly of the millennium that that the gold standard may have the power to unite somewhat the fractious factions of the conservative movement.

And to avert your understandable anxiety dear reader Tyrrell Kristol and Bell survived the encounter hospitably received. Perhaps a few swords will be beaten into ploughshares.   (How Bill Kristol might react to such a subversive proposition is an open question.  Still… united we stand.)

As Cato publicized the event at Cato.org

Lewis E. Lehrman President Ronald Reagans gold commissioner and co-signer of the iconic commission minority report The Case for Gold will make a rare Washington D.C. public appearance to debut his latest work Money Gold and History. In his new book Lehrman founder and chairman of the Lehrman Institute compiles many of his key writings from almost 40 years of publications and complements them with new and important essays on the classical gold standard. Among the works included are his testimonies at the request of former representative Ron Paul before the House Subcommittee on Domestic Monetary Policy his address before the Parliament of France and many essays in leading publications including the Wall Street Journal the American Spectator and the Weekly Standard. Lehrman a student of iconic French economist Jacques Rueff and author of the critically acclaimed book The True Gold Standard is a preeminent advocate of restoring a modern classical gold standard.

Lehrmans remarks were striking.  Perhaps most heartening was his conclusion one in accord with another gold standard titan: Steve Forbes.

As the gold standard continues to emerge as a respectable even compelling public policy option competing schools of thought emerge.  These range from the great Ron Pauls (and APIA chairman Sean Fielers) prescription for choice in currencies a la Hayek to Lehrmans prescription of the classical gold standard a la Americas statesmen to Forbess proposal of a goldless gold standard" in which If the price of gold were to go above that the Federal Reserve would sell bonds from its portfolio thereby removing dollars from the economy to maintain the $1300 level. Conversely if the gold price were to drop below $1300 the Fed would print new money by buying bonds thereby injecting cash into the banking system."

Competing currencies (a la Hayek) defining the dollar as a fixed weight and convertible into gold (a la Lehrman) or having the Fed buy and sell bonds based on movements in the price of gold (a la Forbes) suggest some material differences.  Both Forbes and Lehrman are statesmanlike in encouraging an empirical review and intelligent discussion of the various proposals. Forbes:

Just as there are many variations on democracy there are also variousand legitimatetypes of gold standards. … There have been permutations of the gold standard."

Lehrman in summation took a comparable generous stance by posing the question what is to be done?" rather than prescribing the classical gold standard.  Now is a time for discourse.  Lehrman:

Since the end of convertibility in 1971 average real wages per hour of work in the United States have been stagnant. Average annual American economic growth since 2000 has been about half the average annual real growth of the previous two American centuries.  The real purchasing power of a 1971 dollar saved in the bank adjusted by the CPI has declined to a value of about 15 cents.  That is to say the price level has risen from 1971 to 2013 by about six-fold a rise unparalleled in the history of the American Republic.  In a word the American middle class relatively speaking has been gradually dispossessed.

The consequences of the collapse of real money worldwide are still unfolding.  But let it be said that only one century of post-World War I financial disorder has been written.

And now the question is: what is to be done?  So let us move forward to our discussion and let us inquire together what is to be done."

What indeed is to be done?

Let us inquire together."

The Centennial Monetary Commission legislation sponsored by Rep. Kevin Brady (R-TX) chairman of the Congressional Joint Economic Committee now has gained 23 co-sponsors (up from an original 12) and steadily is gaining more.  It is perfectly fitted to carry out this mandate.  Lehrman in his remarks prominently endorsed this legislative initiative.

This bi-partisan bicameral commission is structured to conduct a broad-based look at monetary policy.  It is by no means a gold commission."  The gold standard is but one of six regimes to be thoroughly examined.  Such a forum would provide the proponents of the varietals of gold standard regimes a dignified opportunity to present their empirical analysis and recommendations.   Proponents of the current fiduciary management of rules-based management of NGDP-targeting price level or interest rate targeting similarly would present the evidence for their preferred systems.

Such an empirically based commission would be an optimal forum for all who care about the impact of monetary policy. Given moneys potency everybody especially every elected official and recently recommended by Sen. Rand Paul ought to care.