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Paul Gordon Collier

Is the gold standard about gold or ‘good money’? – Paul Gordon Collier

If it’s about ‘good money’, what is good money and why is it good for our Freedom?

Ralph Benko, a Forbes.com contributor, has written a piece on ‘good money, entitled It’s time for an american economic miracle- good money-good jobs , which outlines the fundamental principle of good money, money that is stable, and why it’s good for a healthy economy- good money leads to greater predictability in the economy that allows entrepreneuers to more safely embark on ventures that won’t be put at risk by bad monetary policies which might deflate or inflate the currency.

In case you’re intererested, entrepeneurs create jobs and wealth that directly affect the lives of the nations who enjoy the benefits of good money.  Benko rightly cites the 1948 German economic miracle, the Reagan revolution, and even the golden age of entrepreneurship, the Gilded Age, as being the direct result of a good money policy.

For Benko, the creator of good money would be a return to the gold standard, a policy The Freedomist endorses, supports, champions as well.

For our Tea Party readers, the good money benefits are readily seen, a free market that is friendly to the creation of new businesses and the expansion of existing ones, but for our Christian readers, perhaps the idea of good money is not as readily seen to be directly relevent to our central mission, to make disciples of nations.

In the coming weeks, months, however long it takes, I, Paul Gordon Collier, will take it upon myself to offer to our Christian readers (of which I myself am one) of The Freedomist, the reasons why a policy of ‘good money’, a gold standard policy directly impacts the great commission.

For now, though, read the whole article by Ralph Benko here- – http://www.forbes.com/sites/ralphbenko/2012/06/18/its-time-for-an-american-economic-miracle-good-money-good-jobs/

Or read an excerpt of the article below:

Good money (and low tax rates) were also the key to America’s great Industrial Revolution prosperity.  Economic historian Brian Domitrovic writes, in Forbes.com:

“Booms in the 19th century – for example, 1875 to 1892 – saw growth sustained for decades at 5.3%. A growth rate of 5.3% means that in just twenty-five years, the economy is two-thirds larger than under a rate of 3.3%.

“What was the secret to the outsized growth of the 19th century, particularly its latter portion, the Gilded Age? There were great technological innovations and large population increases, to be sure – but these things came in the 20th century as well. What was different back then was the absence of macroeconomic institutions.

“There was no Federal Reserve, and there was no income tax …. No wonder we had such an incredible boom.”

Good money was fundamental to De Gaulle’s French Economic Miracle of 1958 engineered by the same Jacques Rueff cited by Erhard.  Good money was fundamental to the Reagan Revolution.  Reagan, with Fed Chairman Paul Volcker, reformed the papier mâché Carter Dollar … and cut marginal tax rates.  Good money and lower marginal rates put America on course to drive its key stock market index from 1,000 to 14,000.

Gov. Romney, last January, told Larry Kudlow, “You know, I’m happy to look at a whole range of ideas on how to have greater stability in our currency and in our monetary policies.” Romney senior economic adviser R. Glenn Hubbard, argues vigorously against the “discretionary activism” of the Obama Fed in a book he recently co-authored, Seeds of Destruction, which entitles a chapter “Why an Easy-Money Street is a Dead End.”

But in the Buckeye State the candidates were duking it out on tax, spending, and regulatory policy.  All of these are, of course, important.  If “taxmaggedon” hits as scheduled in January America might well join in the collapse of the wobbly economies of Europe.  But neither candidate addressed, much less emphasized, the missing element required for job growth: good money.

The presidential candidates have dramatically differing views on what constitutes good monetary policy.  Obama seems to favor Chairman Bernanke’s central planning discretionary activism.  The GOP stands for what economist John Taylor called, in the Wall Street Journal, “a … more rules-based policy of the kind that has worked in the past.” Republican elites lean toward the Taylor Rule.  The GOP base — including the followers of libertarian icon Ron Paul and Tea Party champion Herman Cain — leans strongly toward the true gold standard (as detailed in the eponymous book by Lewis E. Lehrman, whose nonprofit Institute this writer professionally advises).

If Prof. Taylor is serious about a “policy of the kind that has worked in the past” he need look no further than the work of the late Roy Jastram, professor in the School of Business Administration, Berkeley.  Jastram’s work widely is considered, well, the gold standard on the performance of monetary standards in history.  In 1981 Jastram summed up  a key finding:

“From the time the United States went off the gold standard in 1933 the wholesale price level has gone up by 760%. Since England abrogated the gold standard in 1931 her price index number has risen by over 2000%.

“Before that the two countries had a combined history of 350 years of long-run price stability. The price level was the same in the United States in 1930 as it had been in 1800. In England the price index stood at 100.0 in 1717 (the first year of her gold standard) and it was at that figure again in 1930.”

Good jobs require good money. Rep. Kevin Brady, vice chairman of the Joint Economic Committee (with 42 House cosponsors) and Sen. Mike Lee have begun to move the monetary reform question on Capitol Hill.  These leaders are doing something important in helping to hammer out the missing variable in job creation, good money, and creating a forum where the proponents of the Taylor Rule and the proponents of the gold standard can make their respective cases.

Time, and past time, for an American Economic Miracle.  Good money is absolutely necessary for prosperity and for job creation.  To read the full column, click here now.