While the Democrats and the Republicans weigh the debt limit pact struck by President Biden and Speaker McCarthy, we don’t mind saying that we’re disappointed. We had hoped, vain though that hope might be, for some attention to be given in this parley to monetary reform. That was the point of our editorial called “The Gathering Storm.” The compromise being contemplated means the storm will be delayed but the impact will be greater.

We comprehend that the GOP shares part of the burden in respect of overspending. And let us also say that it’s possible to have a balanced budget when the currency lacks a link to gold or silver. The last balanced budget we had was under President Clinton. During his presidency the dollar steadily gained in value and on the day President George W. Bush was sworn in to office it was a 265th of an ounce of gold.

It’s been downhill from there, a vertiginous course of debasement that saw the dollar plunge below a 1000th of an ounce in the aftermath of the 2008 financial crisis and hit a record low, a 2069th of a gold ounce, at the nadir of the Covid pandemic. The dollar is currently flirting with blowing past that record, the Financial Times reports, as some forecasters envision the dollar sinking in the near future to a 3,330th of an ounce of gold.

We keep marking the value of the dollar because the entanglement of the debt debacle and the monetary crisis is plain. Our Everest of red ink is only possible under a fiat money regime. A classical gold standard imposed a tight discipline on central banks — and governments. Maintaining a currency convertible in specie helped keep a brake on spending — and borrowing.

Hence the need for a monetary commission — like the one in the early 20th century that led to the creation of the Federal Reserve — to formally weigh the performance of our experiment in fiat money in the 50 years since Congress severed the last link between the dollar and gold. A commission’s remit would also evaluate the effectiveness of the Fed itself, and trace a course for a return to honest money.

Such a commission would be in keeping with the GOP’s longtime association with sound money, starting with General Grant’s restoration of gold convertibility in the 1870s. Grant, too, was unswerving in his commitment to repay the national debt in gold, in keeping with the spirit of the 14th Amendment. His policies ushered in two generations of prosperity that brought America to world industrial predominance — with low inflation, to boot. 

In 1980, President Reagan’s landslide victory was on a perfectly plain platform plank promising the “restoration of a dependable monetary standard” to put an “end to inflation.” The Gold Commission that finished its work in 1981, though, proved a missed opportunity in part because it ended up being staffed by advocates of fiat money. GOP platforms in 2012, 2016, and 2020 renewed the call for a national monetary commission.

Looking back to Reagan’s 1980 platform, the GOP in 2016 proposed taking a hard look at the fiat money debacle. The dollar then stood at around a 1,200th of a gold ounce. “As we face the task of cleaning up the wreckage of the current administration’s policies,” the platform said, in a reference to President Obama, “we propose a similar commission to investigate possible ways to set a fixed value for the dollar,” the platform said.

Looking to 2024, we are heartened to see several top candidates, like Governor DeSantis and Vice President Pence, making the mismanagement of the dollar a campaign issue. As Senator Cruz told us, it would take a committed president to restore sound money. As the urgent phase of the debt ceiling crisis recedes, offering more breathing room to address federal overspending — and borrowing — the need for a monetary commission is looking clearer than ever.