GOP Platform Calls For Gold Commission

A blog about business and economics.
Aug. 24 2012 8:54 AM

GOP Platform Calls For Gold Commission, Paul Ryan Calls for Something Crazier

150522947
MANCHESTER, NH - AUGUST 20: Republican presidential candidate, former Massachusetts Gov. Mitt Romney with Republican vice presidential candidate, U.S. Rep. Paul Ryan (R-WI) (R) hold a campaign stop at Saint Anselm College on August 20, 2012 in Manchester, New Hampshire.

Photo by John Moore/Getty Images

The financial press is giving a fair amount of attention to the fact that the Republican platform is calling for a commission to study the idea of a gold standard. As far as bad monetary policy ideas go, I find this one pretty inoccuous. Ronald Reagan appointed a commission like that early in his term as a sop to the monetary nutters in his coalition and it sensibly recommended that we not do it. Commissions are a great way to kill bad ideas.

The striking thing to me is that the GOP's vice presidential nominee and acknowledged thought-leader Paul Ryan has been stumping for some time on behalf of a worse idea.

Advertisement

The notion of tying the value of the dollar to a basket of commodities sounds at first glance like a sophisticated alternative to the crudeness of a gold standard. But the problem and the merits of the gold standard are one and the same—it's basically arbitrary. You're letting the supply of money be determined by fluctuations in the gold mining industry that have nothing to do with anything. That's annoying, but it's not catastrophic. Money based on a broader set of actually useful commodities is much more problematic. It means that if a drought devastates the corn crop or a war disrupts Persian Gulf oil supplies, we automatically respond with tight money and a demand-induced recession. Alternatively, if someone discovers a cheap pollution free method of generating unlimited electricity we'd end up with a ton of inflation. And unlike gold, proponents of this approach can't even appeal to history and tradition as an excuse.

Commodity-backed money is basically a solution to a non-problem. Or at least it's not a problem you have if you don't accept a Randian deeply moralized view of market outcomes. The existince of fiat money is embarassing to that kind of ideology, so it inspires quests for alternatives to modern central banking even when the alternatives don't make sense.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Sports Nut

Grandmaster Clash

One of the most amazing feats in chess history just happened, and no one noticed.

The Extraordinary Amicus Brief That Attempts to Explain the Wu-Tang Clan to the Supreme Court Justices

Amazon Is Officially a Gadget Company. Here Are Its Six New Devices.

Do the Celebrities Whose Nude Photos Were Stolen Have a Case Against Apple?

The NFL Explains How It Sees “the Role of the Female”

Future Tense

Amazon Is Now a Gadget Company

Food

How to Order Chinese Food

First, stop thinking of it as “Chinese food.”

Scotland Is Inspiring Secessionists Across America

The Country Where Women Aren’t Allowed to Work Once They’re 36 Weeks’ Pregnant

The XX Factor
Sept. 18 2014 11:40 AM The Country Where Women Aren’t Allowed to Work Once They’re 36 Weeks’ Pregnant
Moneybox
Sept. 17 2014 5:10 PM The Most Awkward Scenario in Which a Man Can Hold a Door for a Woman
  News & Politics
Weigel
Sept. 18 2014 3:19 PM In Defense of Congress Leaving Town Without a New War Vote
  Business
Business Insider
Sept. 18 2014 3:31 PM What Europe Would Look Like If All the Separatist Movements Got Their Way
  Life
Outward
Sept. 18 2014 4:15 PM Reactions to a Sketch of Chelsea Manning Reveal Transmisogyny
  Double X
The XX Factor
Sept. 18 2014 3:30 PM How Crisis Pregnancy Centers Trick Women
  Slate Plus
Behind the Scenes
Sept. 18 2014 1:23 PM “It’s Not Every Day That You Can Beat the World Champion” An exclusive interview with chess grandmaster Fabiano Caruana.
  Arts
Culturebox
Sept. 18 2014 4:00 PM When The Cosby Show Got “Very Special” Why were The Cosby Show’s Very Special Episodes so much better than every other ’80s sitcom’s?
  Technology
Future Tense
Sept. 18 2014 4:26 PM Global Oceans Break All-Time Heat Record; World on Pace for Warmest Year Ever
  Health & Science
Science
Sept. 18 2014 3:35 PM Do People Still Die of Rabies? And how do you know if an animal is rabid?
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.