Ted Cruz recently was subjected to several unfair, but of course not unexpected, attacks by liberals at, or channeling, The New York Times. The Grey Lady’s columnist/blogger Paul Krugman and reporter Binyamin Appelbaum attacked Cruz for his advocacy of the gold standard. (Appelbaum’s column was in part replicated by “reformocon” AEI blogger James Pethokoukis in his oddball, ill-founded, Forever War against the gold standard.)
Such attacks, of course, are to be expected as Cruz rises in the polls as he now is doing. Having taken the lead in Iowa, Cruz is certain to attract heightened attacks from the left.
Three public intellectuals quickly rallied to Cruz’s defense by pointing out some of the errors and omissions in the Appelbaum critique. (I, a Public Nuisance, also address some of these maters in a pending column awaiting publication.)
To give Prof. Krugman the short shrift his writings deserve, he opened, in “The Passive-Aggressive Monetary Two-Step,” “Ted Cruz somewhat surprised Janet Yellen by accusing the Fed of causing the Great Recession by tightening monetary policy in 2008…” True enough. Krugman then, however, goes on, in his classic Mr. Magoo fashion, to write: “He is already on record as an ardent supporter of a return to gold. Needless to say, a gold standard would have meant much tighter, not looser, monetary policy since 2008.”
Prof. Krugman is correct in reporting Ted Cruz as “an ardent supporter of a return to gold.” That said, he is simply wrong — risibly so — in asserting that “a gold standard would have meant much tighter… monetary policy since 2008.” Paul Krugman, who has descended from economist to polemicist, is just making that part up. While there is a place in politics for propaganda the readers of The New York Times (like me) deserve much better quality propaganda than this.
Forbes Media Editor-in-Chief Steve Forbes, Forbes.com‘s political opinion editor John Tamny, and Forbes.com contributor Nathan Lewis all promptly furnished columns addressing the Times‘s errors and omissions about the gold standard. Steve Forbes, in “The New York Times Leaden Analysis of Gold” wrote:
THE NEW YORK TIMES recently ran an article trashing the idea of a return to a gold standard. A growing number of Republicans, including presidential hopeful Senator Ted Cruz, advocate fixing the value of the dollar to gold.
If the purpose of the Times story was to discredit such a possibility before it gained any more momentum, it failed. The piece is actually useful in that it encapsulates some of the egregious myths, misunderstandings and just plain ignorance of what a gold standard is all about.
Forbes then meticulously lays out how the attacks on Cruz are contradicted by the actual data, concluding: “The crux of the gold debate is about power: The New York Times and many economists like the idea of government dominating the economy; honest money advocates don’t.”
John Tamny, in “Binyamin Appelbaum’s Well-Meaning Gold Standard Misfire” wrote:
“The greatest contribution that America can make to international cooperation is to…stabilize the dollar in terms of a fixed quantity of gold.” Who said this, or who wrote it? Sen. Rand Paul, Sen. Ted Cruz, maybe Steve Forbes?
In fact the above quote came from a New York Times editorial in July of 1944.
Appelbaum unwittingly promoted a lot of falsehoods about monetary stability held by the left, all the while allowing to stand similar falsehoods believed by the right. Additionally, his analysis about the presumed economic consensus regarding gold left out some valuable historical truths.
Tamny recites those historical truths in very compelling fashion. And concludes:
In Appelbaum’s defense once again, he meant well with his analysis of the gold standard, and his reporting was hardly bitter. The obvious problem with it was that like most reporters on the subject of stable money, he was writing blind. Despite his evident unfamiliarity with the subject, his article included no interviews with anyone who actually supports gold-defined money. It showed.
Still, it wasn’t angry. Maybe from his misfire will spring actual dialogue. Money’s sole purpose is exchange. That’s the “why” behind “gold” and “stable.” Hopefully future pieces by him will acknowledge the importance of currency stability that he at least alluded to. If he’s got a better way to define money in order to achieve currency stability, true gold advocates will welcome his thoughts with open arms.
Then, Nathan Lewis, in “40 Out of 40 Economists Agree: The Monetary System That Made America Great Is Nonsense,” lays out in lavender how the gold standard correlated with an unrivaled era of equitable prosperity in America (and the world):
Britain – which in the 17th century had been an economic backwater of no great significance – [upon adopting the gold standard] became the financial capital of the world, the birthplace of the Industrial Revolution, and ruler of the greatest global empire of the era.
Britain’s monetary leadership faltered after World War I. The devaluation of 1931 was followed by a period of floating currency, and then several devaluations after WWII.
After 1914, the world’s greatest example of gold standard discipline was the United States. Although there was a devaluation in 1933, the dollar remained linked to gold afterwards, and there were no more devaluations until 1971.
The United States, which had been secondary to Britain in 1914, then rose to be the world’s financial center, the leading example of industrial excellence, and ruler of what amounted to the greatest global empire of the era.
What a coincidence.
The New York Times, surveying the landscape of contemporary thought, told us recently that out of 40 “leading economists,” all 40 said that a gold standard “would not improve the lives of average Americans.’
At the end of the gold standard era, in the 1960s, the U.S. had the wealthiest middle class the world has ever seen.
If the gold standard policy didn’t “improve the lives of average Americans,” how was it possible that, after 182 years, the average American was wealthier than ever?
Steve Forbes, John Tamny, and Nathan Lewis are right. The New York Times, along with 40 out of 40 academic economists (few of whom, let it be noted in passing, are monetary economists), simply have the impact of the gold standard factually wrong. This likely will change as the Grey Lady gets current with the work of contemporary reliable authorities on the gold standard. For now such commentary is far beneath its usually high journalistic standards.
The gold standard has repeatedly proved itself the “gold standard” of monetary integrity. The gold standard, if correctly resumed, will prove itself invaluable in ending secular stagnation and restoring the American Dream.
Ted Cruz is right. Cruz is on solid ground in advocating for the gold standard. High monetary integrity is essential to renewed, sizzling job creation and equitable prosperity, very much making “the average American… wealthier than ever.”
Ralph Benko, internationally published weekly columnist, co-author of The 21st Century Gold Standard, lead co-editor of the Gerald Malsbary translation from Latin to English of Copernicus’s Essay on Money, is American Principles Project’s Senior Advisor, Economics.