Krugman Endorses Theft Via Funny Money

By Edward Hudgins

March 26, 2016 -- In his latest column entitled “Crazy About Money,” Paul Krugman goes after Sen. Ted Cruz and House Speaker Paul Ryan for their endorsement of a return to the gold standard. But who is crazy?

The idea of a return to the gold standard disturbs him especially because the GOP gentlemen seem to have gotten it from Ayn Rand. (He even links right here to The Atlas Society as proof of this nefarious connection!) I wish they got all their policies from that source! But more important than debating Krugman’s economic errors is highlighting his moral errors.
 

The gold standard didn’t cause the Great Depression

Krugman argues that there is a consensus among economists that returning to the gold standard is a bad idea. Rather, he believes that it is better to allow the federal government through the Federal Reserve to control the money supply. For example, he says many economists believe “that a destructive focus on gold played a major role in the spread of the Great Depression.”

Wrong! The newly-created Fed in the U.S. after World War One was able to inflate the currency, that is, print up dollar bills, because those bills were no longer strictly tied to a certain amount of gold. The goal at that time was, in part, to bring the exchange rate of the dollar with the British pound and other currencies into line with the rates that existed before the War, when currencies were tied to gold. They inflated the dollar—the Florida land boom and ‘20s stock boom resulting—and when they hauled back on the money supply. . . Pop went the markets!

Krugman forgets that Britain and North America industrialized in the 19th century, experiencing growth as fast as in the 20th, while basing their monies in gold. Of course, a bigger picture issue is that what we need is a free banking and monetary system. Then people will choose the best money for them: gold-backed, bitcoin, or perhaps suddenly trusty Federal Reserve notes.
 

Government can cheat and steal

When the government forces individuals to abandon gold as a currency and exercises control over money, the medium of exchange, the deeper problem is a moral one.

First, political control of money usually is part of a fundamental evasion of reality. Pandering politicians think they can get something for nothing... (Continue reading here.)