All Eyes on Gingrich in Wake of His Call for a Commission on the Gold Standard

All eyes at the debate tonight will be on the former speaker of the House, and current president aspirant, who this week dramatically moved the political discourse by calling for a new Gold Commission.

Mr. Gingrich is no stranger to gold. He was one of the seven cosponsors of Jack Kemp’s 1984 Gold Standard Act. A gold commission is an astute way of easing into a subject that every candidate fears might put them into a thicket of technicalities over their heads. Even Rep. Ron Paul, well associated with the issue, is curiously standoffish in campaigning on it, concentrating on closing military bases and auditing the Fed.

Perhaps this diffidence stems from the fact that Dr. Paul’s preference — competing currencies — is so radical, drawing a wall of separation between money and state. That’s a great system, favored late in his career by Friedrich Hayek, but it’s not exactly what the Founders of America had in mind. They understood money as a specified number of grains of silver or gold.

What Mr. Gingrich, a student of history, is wagering on is that promoting the gold standard is major vote getter. As my colleague Ralph Benko and I wrote earlier this month in Roll Call:

Thirty-three percent of South Carolina’s primary voters are very favorable to the gold standard, with another 18 percent somewhat favorable. Only 11 percent are very unfavorable with 6 percent somewhat unfavorable. Gold presents as an unequivocal (3-1) electoral asset in South Carolina.

In the general election, according to Rasmussen, gold also presents as an electoral asset. Gold is not an expedient to gain the nomination for which penance must later be done. . . . Rasmussen: ‘The majority of voters across nearly all demographic groups favor the gold standard if it would dramatically reduce the power of central bankers and political leaders over the economy.’

The gold standard addresses a problem noted recently by no less a sage than Michael Barone.

Romney has been leading in South Carolina polls this month, with Gingrich gaining only slightly and Santorum surging after Iowa and then falling back a bit after New Hampshire.

Both Santorum and Gingrich depict themselves as bold conservative alternatives to Romney. Santorum says he’s stronger because he beat Gingrich in Iowa and New Hampshire. ...

But neither has found a wedge issue that undermines the front runner. (Emphasis supplied.)

All the GOP candidates are for tax and (mostly unspecified) spending cuts, and for regulatory reform and a more forward leaning energy policy. There isn’t much difference on who is going to repeal Obamacare fastest.

But monetary policy was at least as important as tax policy to the Reagan Revolution and to virtually every major turnaround of the 20^th century, like Ludwig Erhard’s German Economic Miracle, the Wirtschaftswunder of which Jacques Rueff, wrote (with André Piettre):

Only an eye-witness can give an account of the sudden effect which currency reform had on the size of stocks and the wealth of goods on display. Shops filled with goods from one day to the next; the factories began to work. On the eve of currency reform the Germans were aimlessly wandering about their towns in search of a few additional items of food. A day later they thought of nothing but producing them. One day apathy was mirrored in their faces while on the next a whole nation looked hopefully into the future.

So: monetary reform not only is politically popular, it’s great policy. Even the highly conservative Bank of England recently conceded that the gold standard, at least in its Bretton Woods incarnation, is far better than what we've got now.

But the gold standard is technical, and thus hard to explain. Thus a well designed gold commission — which Gingrich’s surely would be — can provide an adroit mechanism. The 1981 gold commission was designed by monetarists to be a death trap for the gold standard. But a commission with people like Lewis Lehrman (a Reagan gold commissioner), Sean Fieler, Steve Forbes, John Allison, James Grant, Jeffrey Bell, Judy Shelton, Lawrence White, Ralph Benko, Charles Kadlec, John Tamny, and others who have come to the fore would constitute an ideal tribunal in which to resolve Mr. Forbes’s challenge: which gold standard?

Gingrich’s call for a gold commission — following so shortly on a Weekly Standard report that Senator Paul also desires (and certainly should be a member of) such a commission — deserves a standing ovation on all counts: substance, process and politics. Since the classical gold standard itself first was designed to perfection by Sir Isaac Newton, perhaps there is even a frisson of destiny that such a gold commission might be convened, if his momentum continues to grow, by President Newton Gingrich.

Mr. Blom is the executive director of American Principles in Action, a Washington, D.C.-based nonprofit public interest policy group.