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Gold Standard Is Sound Policy

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

By Ralph Benko

NEW YORK (TheStreet) -- In the aftermath of former House Speaker Newt Gingrich's call for a new Gold Commission, columnist Gary Weiss launched into a witty attack on proponents of the gold standard:

Gold bugs, the lunatic fringe of investing and economics, have crept into national politics. What's next? Flat-earth advocates? Area 51 conspiracy theorists?

Weiss is in excellent elite company. According to a letter to the New York Times, "When asked about a gold standard [at a February interview at the 92nd Street Y in New York City former Treasury Secretary Larry] Summers recoiled and shrieked, 'A gold standard is the creationism of economics!'"

That great bastion of reaction, the University of Chicago, and specifically its Booth School, recently polled 40 economists to discover exactly none supporting the gold standard. Austan Goolsby, former chairman of the Council of Economic Advisers, also of Booth, tweeted, as part of #fedvalentines, "Roses are red. Violets are pink. Don't listen to goldbugs. No one cares what they think."

All very merry. The only problem? Two, really.

Violets aren't pink.

And lots of people are beginning to care what goldbugs think.

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Not so very long ago the gold standard was considered a maverick proposition. But while Professor Goolsby and Gary Weiss have been off smelling the flowers something fundamental has changed.

Weiss is certainly right about one thing. Gold has crept into national politics. As a recent columnist in Forbes.com wrote:

I just spent three days at the Conservative Political Action Conference (CPAC) - a conference filled with 18 to 29 year olds -- and it seemed that everywhere I turned, I bumped into gold. In less than 10 minutes in the conference's exhibition section, I collected three books/monographs (A Guide to Sound Money by Judy Shelton; The 21st Century Gold Standard by Ralph Benko and Charles Kadlec; The True Gold Standard by Lewis E. Lehrman) and a dozen pamphlets on the merits of gold. On Thursday, I swung by one of the conference's first breakout sessions: "The Need for a Twenty-first Century Gold Standard." When I asked CPAC participants what issues they cared about, "the economy" and "jobs" of course topped the list, but, bizarrely to me, "the gold standard" regularly came up as an issue of importance.

The mainstream media, among others, while not yet rushing to embrace them, has adopted a generally respectful tone toward proponents of the gold standard. The mainstream rehabilitation of gold might best be summed up by a headline in The New York Times of last Aug. 15th, "A Gold Standard Is Unthinkable No More," which concludes "A return to the gold standard remains unlikely, but it's no longer unthinkable."

Nor is the New York Times an outlier here. Very recently, the Wall Street Journal -- which has been steadfastly agnostic about the gold standard -- carried an article by one of its editorial board members referring to Speaker Gingrich's call for a Gold Commission as one of the campaign seasons "best ideas" and suggesting that Gov. Romney poach it.

Now two frightening outposts of the lunatic fringe, The Atlantic Monthly and The New Yorker, give, at the very least, grudgingly respectful hat tips to the gold standard. The Atlantic Monthly, ran a fascinating and erudite article by David Wolman, Wired (yes, Wired, that icon of all things musty and anachronistic) contributing editor, former Fulbright journalism, titled A Short History of American Money, From Fur to Fiat , observing:

[T]he founding fathers deliberately forbid the nascent federal government from issuing "bills of credit." Paper money, one delegate noted, was "as alarming as the Mark of the Beast." The federal government was, however, granted authority "to coin money, regulate the value thereof ... and fit the standard of weights and measure.

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