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Keynesians Are In Hysterics Because Their Funny-Money Experiment Is Coming To An End


Keynesians Are In Hysterics Because Their Funny-Money Experiment Is Coming To An End\

At the Washington Post’s “Wonkblog,” Matt O’Brien wrote a typical sort of hysterical screed about the gold standard system – the system that the United States used for nearly two centuries, until 1971. During that time, the country went from a handful of rebellious subsistence farmers, worn down by over a decade of war, hyperinflation and unstable government, to the most successful and wealthiest country in the world.

Think about that.

Now, let’s see what O’Brien wrote:

“When it comes to crackpot economic ideas, the gold standard is, well, the gold standard.

It’s a barbarous relic that has nothing to recommend it today. Pegging the dollar to the price of gold, you see, is just a doomsday device for turning recessions into depressions.”

To me, even without getting into any details, this smacks of a certain lack of connection with any fact of reality or history. You just don’t become the most successful country of the last two centuries with a “crackpot” monetary system that is a “doomsday device.”

The last twenty years of the U.S.’s gold standard era – the Bretton Woods years when the dollar was worth 1/35th of an ounce of gold – were times of prosperity and abundance, especially for the U.S. middle class. The gold standard era didn’t end in 1971 because it was producing bad results, and people decided it was time to find something better. It ended because those responsible for maintaining it were idiots.

I would even say that those years, the 1950s and 1960s, were the best of the last century, 1914-2014.

If the gold standard system is so horrible, then how did that happen?

Since 1971, even by the U.S. government’s falsely sunny statistics, the U.S. “real” median full-time male income has gone nowhere.