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The Gold Standard: Friend of the Middle Class

 

 

A Morally and Economically Superior Monetary System

It has been theoretically demonstrated and seen in general practice that a monetary system of 100% metallic money devoid of central banking checks monetary inflation, prevents a general rise in the price level, and eliminates the dreaded business cycle while making all sorts of monetary mischief nearly impossible.

A gold standard is not only economically superior to any paper money scheme, but is morally just, which is why it is hated by the politically well-connected, academics, politicians, and the rest of the Establishment.

Often not discussed, however, even by its proponents is the beneficial effect that “hard money” has for the middle class.

It is not a coincidence that since the U.S. left the last vestiges of the gold standard in 1971with President Nixon’s nefarious decision to no longer redeem international central bank payments in gold, real wages for Americans have stagnated.

Nixon’s decision to put the nation on an irredeemable paper money standard set it on a course of economic ruination, which is why he should have been hounded from office not for his role in the bungled, petty cover up at the Watergate.

The Gold Standard: Friend of the Middle Class

A Morally and Economically Superior Monetary System. It has been theoretically demonstrated and seen in general practice that a monetary system of 100% metallic money devoid of central banking checks monetary inflation, prevents a general rise in the price level, and eliminates the dreaded business cycle while making all sorts of monetary mischief nearly impossible. - Click to enlarge

Stagnating wages

Stagnating wage rates have been confirmed by a number of studies, take, for instance one from the Pew Research Center which states that:

“Today’s average hourly wage has just about the same purchasing power as it did in 1979. . . . In real terms the average wage peaked more than 40 years ago: The $4.03-an-hour rate recorded in January 1973 has the same purchasing power as $22.41 would today.”*

The stagnation of US real wages since Nixon’s “temporary” gold default, from a 2014 Pew Research Center study

A Morally and Economically Superior Monetary System. It has been theoretically demonstrated and seen in general practice that a monetary system of 100% metallic money devoid of central banking checks monetary inflation, prevents a general rise in the price level, and eliminates the dreaded business cycle while making all sorts of monetary mischief nearly impossible. - Click to enlarge

Wages rise only at the top

While the absence of the gold standard has impoverished laborers, it has benefited (not surprisingly) the very wealthy – hence, the reason why it was abandoned, as the Pew Study reports:

“What gains have been made, have gone to the upper income brackets.  Since 2000, usual weekly wages have fallen 3.7% (in real terms) among workers in the lowest tenth of the earnings distribution, and 3% among the lowest quarter.  But among people near the top of the distribution, real wages have risen 9.7%.”**

Of course, this was part of Nixon’s plan: redistribution of wealth from the middle class and low income groups via money printing to the political class.  Such a scheme, however, could have only happened if the gold standard was eliminated.

The Cantillon effect in action: monetary inflation has redistributed wealth – mainly from the poor to the rich.

A Morally and Economically Superior Monetary System. It has been theoretically demonstrated and seen in general practice that a monetary system of 100% metallic money devoid of central banking checks monetary inflation, prevents a general rise in the price level, and eliminates the dreaded business cycle while making all sorts of monetary mischief nearly impossible. - Click to enlarge

A Simple Solution for a Difficult Problem

Since the start of the abominable Obama Administration in 2009, the adjusted monetary base of the U.S. rose from $1.772 trillion to $3.966 trillion as of March 16, 2016.***

Of course, even these unfathomable figures as well as all other information supplied by the dominant media and government cannot be trusted.  It, therefore, can be safely assumed that the real money supply is more than officially reported.

Money, like every other good, is subjected to the immutable law of supply and demand.  Every increase in the money supply reduces the purchasing power of the monetary units which are already in circulation.

Naturally, since wages are paid in dollars, increases in the supply of them will decrease their purchasing power.  Thus, while nominal wages have gone up as the Pew Study shows, real wages (what wages can purchase) have stagnated.

Lower standard of living

The decline in real wages over the decades from profligate money printing has resulted in lower standard of living for wage earners and those living on fixed incomes.

The rise in two income families is, in part, a consequence of a paper money economy and the fact that the financial survival of families now requires two incomes.  Two-income families have also profound cultural implications which are now manifesting themselves.

There has been much talk throughout the current presidential campaign about the financial decline of the middle class.  Candidates on the Left naturally talk of subsidies and more redistribution of wealth while those on the Right have called for tax cuts.

While tax reduction of any kind is always welcomed and leads to economic growth, a sound monetary policy is just as important for a revitalization of the middle class.  Moreover, a return to honest money does not require any expansion of government spending or debt.

US broad money supply TMS-2 (black line) and assets held by the Federal Reserve system (red line). A picture of monetary inflation in overdrive – click to enlarge.

A Morally and Economically Superior Monetary System. It has been theoretically demonstrated and seen in general practice that a monetary system of 100% metallic money devoid of central banking checks monetary inflation, prevents a general rise in the price level, and eliminates the dreaded business cycle while making all sorts of monetary mischief nearly impossible. - Click to enlarge

 

Conclusion

If policy makers truly want to improve the condition of the middle class, which consists primarily of wage earners, a return to a monetary order of  “hard money” is an economic and moral necessity.

References:

 

*Drew Desilver.  “For Most Workers, Real Wages Have Barely Budged for Decades.”  Pew Research Center.  9 October 2014.

**Ibid.

***Jerome R. Corsi, “Obama’s Latest Fraud: ‘Economic Recovery’ Disproven in Just 9 Charts.”  WND Money.  3 March 2016.

 

Charts by: Pew Research Center, St. Louis Federal Reserve Research

 

Chart and image captions by PT

 

Full story here
Antonius Aquinas
Antonius Aquinas is an author, lecturer, and a senior editor at “Wide Awake News.”
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