Dear Monetary Policy Observer,
Former New Jersey governor Jim Florio voiced a somewhat shrill alarm to the return of the gold standard as a viable campaign issue for federal candidates like Jeff Bell and Rand Paul.
APP economics director Steve Lonegan replies with a well reasoned account of how leaving the gold standard has hurt economic growth and the middle class, and why considering the idea of a gold backed dollar isn’t something that should, as Florio put it in ironically seasonal terms, “have a stake driven through its heart.”
We hope you find this material of interest.
American Principles In Action
Gov. Jim Florio’s “A Proposed Return to the Gold Standard is Cause for Concern” contains a certain irony: Mr. Florio's embrace of the most important decision made about our money in our lifetime made by President Richard Nixon, who left office under a severe cloud.
The facts are clear. During the 40 years prior to Nixon ending the gold standard the nation’s economy grew, on average, 4.5 percent per year. Since the Aug. 15, 1971 “Nixon Shock,” our average GDP growth has dropped by more than 25 percent annually. Had we maintained gold standard growth rates, this country’s economy -- and on average each of your paychecks and net worth -- would be 50 percent bigger today.
Mr. Florio refers to the ensuing "easy money" policies of the Federal Reserve as “stimulating” the economy. He omits that this has led to 1 percent of the population benefiting from 95 percent of the stock market wealth produced by “Quantitative Easing.” Meanwhile, middle-income families have seen their buying power drop 8 percent since 2007, caught in the grip of wage stagnation and a rising cost of living. The rich are getting richer and the middle class is getting poorer.
Read the full article here: http://www.nj.com/opinion/index.ssf/2014/10/lonegan_response_to_florio_gold_standard_oped_hed_goes_here.html