By: Benjamin Weingarten
In a new book titled “The Floating Kilogram,” former long-time Wall Street Journal editor and founder of the New York Sun Seth Lipsky makes an impassioned, reasoned, common sense case for returning America to sound money in the form of the gold standard.
Much like Steve Forbes and Jim Grant with whom we have touched on this issue before, as Seth and I discussed during an in-depth interview, Lipsky believes there is significant economic and moral merit to backing currency with a tangible asset, with benefits for all Americans.
One of his more interesting and overlooked arguments concerns some of the devastating consequences for the country since we officially severed the link between the dollar and gold under President Nixon in 1971. Lipsky explains:
From 1947 when [the] Bretton Woods System really got operating to 1971, when the dollar was convertible into gold at a 35th of an ounce, unemployment in America averaged 4.7 percent. And then we got rid of the Bretton Woods system — we defaulted on it — we went to fiat money, and in the years from 1971 to today, unemployment has averaged significantly above 6 percent. Low unemployment: gold standard. High unemployment: fiat money.
Title: The Floating Kilogram: … and Other Editorials on Money from the New York Sun
Author: Seth Lipsky
Purchase this book
But it’s not just unemployment. The bankruptcy rate which Elizabeth Warren likes to focus on was one point something per thousand for years, and suddenly it shot up. When did it do that? The mid-1970s when we went off the gold standard and moved to the age of fiat money.
And you’ve no doubt read about this economic Thomas Piketty who likes to warn about the inequality rate. It was trending gently downward for years and suddenly it began to shoot up. That was the mid-1970s when we abandoned the gold standard and went to a system of fiat money.
So there are a lot of reasons to start looking at this and to see whether the absence of a sound dollar is the root cause of our system of growing inequality and high unemployment and lack of jobs and high bankruptcy rate, and to see whether something can be reformed so as to bring us back to a system of sound money. [Links ours]
The title for Lipsky’s book, “The Floating Kilogram,” reflects an editorial published in 2011 in his New York Sun, in which Lipsky asked the question, “Why don’t we let the kilogram float?” The implication is that if weights and measures are no longer defined, why shouldn’t the kilogram — a man-made measure which the New York Times noted may have been losing mass — fluctuate just as a dollar fluctuates in value. Lipsky wrote:
[H]ere in the modern age, the members of the Federal Reserve Board don’t worry about how many grains of silver or gold are behind the dollar. They couldn’t care less. And when the value of a dollar plunges at a dizzying rate, the chairman of Federal Reserve, Ben Bernanke, goes up to Capitol Hill and, in testimony before the House, declares merely that he is “puzzled.” No “new urgency” to redefine the dollar for him. The fact is that we’ve long since ceased to define the dollar, and it can float not only against other currencies but against the 371 ¼ grains of pure silver.
So why not the kilogram? After all, when you go into the grocery to buy a pound of hamburger, why should you worry about how much hamburger you get — so long as it’s a pound’s worth. A pound is supposed to be .45359237 of a kilogram, of course. But if the Congress can permit Mr. Bernanke to use his judgment in deciding what a dollar is worth, why shouldn’t he — or some other PhD from Massachusetts Institute of Technology — be able to decide from day to day what a kilogram is worth?
During our interview which you can listen to in full below, we discuss the fundamental flaws in and immorality of floating fiat money and several other topics including:
- Why the gold standard is a live and vital issue today
- What the Constitution says about money
- Congress’ dereliction of duty on money, but causes for optimism given recent reform efforts
- The three times when sound money should be sought out
- Central planning of the money supply enables the expansion of the welfare state
- The folly of the Fed’s full employment mandate
- How America has been in default since the early 2000s
Note: The link to the book in this post will give you an option to elect to donate a percentage of the proceeds from the sale to a charity of your choice. Mercury One, the charity founded by TheBlaze’s Glenn Beck, is one of the options. Donations to Mercury One go towards efforts such as disaster relief, support for education, support for Israel and support for veterans and our military. You can read more about Amazon Smile and Mercury One here.