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President Trump: Replace the Dollar With Gold as the Global Currency to Make America Great Again (Video)

Monday, February 27, 2017 9:21
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(Before It's News)

Forbes – by Ralph Benko

Inside President Trump’s otherwise “standard Trump stump speech” at CPAC was nestled what might be a most intriguing observation:

Global cooperation, dealing with other countries, getting along with other countries is good, it’s very important. But there is no such thing as a global anthem, a global currency or a global flag. This is the United States of America that I’m representing.

There’s a keen insight in there that could, just maybe, transform our lives, America, and the world. No “global currency?”  Was this, with the poetic observation that “there is no such thing as a global anthem…or a global flag,” just a trope? Or could it contain a political portent with potential high impact on world financial markets?  Let’s drill down.

As it happens, there is a global currency.

It’s called the “U.S. dollar.”

Most international trade is priced in dollars. The Bretton Woods international monetary system invested the dollar, which then was defined as and (internationally) was legally convertible to gold at $35/oz, with global currency status.  France’s then-finance minister, later its president, Valéry  Giscard d’Estaing, called the “reserve currency” status of the dollar — its status, along with gold, as global currency — an “exorbitant privilege.”

By this d’Estaing was alluding to the fact, as summarized at Wikipedia, that “As American economist Barry Eichengreen summarized: ‘It costs only a few cents for the Bureau of Engraving and Printing to produce a $100 bill, but other countries had to pony up $100 of actual goods in order to obtain one.’” That privilege, which made great sense during the period immediately after World War II, became a curse.

In 1971 President Nixon, under the influence of his Svengali-like Treasury Secretary John Connally, “suspend[ed] temporarily the convertibility of the dollar into gold.” That closure proved durable instead of temporary. The dollar became, and remains, the world’s global currency.

What had been an “exorbitant privilege” devolved into an exorbitant liability. As my former professional colleague John D. Mueller, of the Ethics and Public Policy Center, formerly Rep. Jack Kemp’s chief economist, writing in the Wall Street Journal in Trump’s Real Trade Problem Is Money recently and astutely observed:

a monetary system based on a reserve currency is unsustainable, since foreign official dollar reserves (for example) are acquired and must be repaid in goods. In other words, the increase in official dollar reserves equals the net exports of the rest of the world, which means it must also equal U.S. international payments deficits—an unsustainable situation.

In other words, if President Trump wishes to address America’s merchandise trade deficit (balanced to perfection, of course, by a capital accounts surplus) he will find that allowing the dollar to be used as the global currency is the real snake in the economic woodpile.  The dollar’s burden as the international reserve currency, not currency manipulation by our trading partners or bad treaties, is the true villain in the ongoing melodrama of crummy job creation.

Mueller’s Wall Street Journal column enumerates the three options open to President Trump:

First, muddle along under the current “dollar standard,” a position supported by resigned foreigners and some nostalgic Americans—among them Bryan Riley and William Wilson at the Heritage Foundation, and James Pethokoukis at the American Enterprise Institute.

Second, turn the International Monetary Fund into a world central bank issuing paper (e.g., special drawing rights) reserves—as proposed in 1943 by Keynes, since the 1960s by Robert A. Mundell, and in 2009 by Zhou Xiaochuan, governor of the People’s Bank of China. Drawbacks: This kind of standard is highly political and the allocation of special drawing rights essentially arbitrary, since the IMF produces no goods.

Third, adopt a modernized international gold standard, as proposed in the 1960s by Rueff and in 1984 by his protégé Lewis E. Lehrman …and then-Rep. Jack Kemp.

To “muddle along” would, of course, be entirely antithetical to Trump’s promise to Make America Great Again. It would destroy his crucial commitment to get the economy growing at 3%+ — vastly faster than it has for the past 17 years  — which also happens to be the recipe for robust job creation and upward income mobility for workers. It also is the essential ingredient for balancing the federal budget while rebuilding our infrastructure and military.

To turn the IMF into a world central bank would, of course, be anathema to Trump’s economic nationalism. To subordinate the dollar to the IMF’s SDR would be equivalent to lowering Old Glory and replacing the American flag with the flag of the United Nations on every flagpole in America. Unthinkable under a Trump administration.

That leaves the third option, to “adopt a modernized international gold standard, as proposed in the 1960s by Rueff and in 1984 by his protégé Lewis E. Lehrman … and then-Rep. Jack Kemp” (whose eponymous foundation I advise). To this one should add, as Forbes.com contributor Nathan Lewis has shrewdly observed, the removal of tax and regulatory barriers to the use of gold as currency.

As I have repeatedly observed Donald Trump shows a strong affinity for gold. He has also shown a keen intuitive grasp of  how the gold standard was crucial to having made America great:

Donald Trump: “We used to have a very, very solid country because it was based on a gold standard,” he told WMUR television in New Hampshire in March last year. But he said it would be tough to bring it back because “we don’t have the gold. Other places have the gold.”

Trump’s comment to GQ: “Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money.”

Trump has been misled to believe that “we don’t have the gold. Other places have the gold.” In fact, the United States, Germany, and the IMF together have about as much gold as the rest of the world combined and America has well more than Germany and the IMF combined. [Note: This column has been updated to clarify that the United States has well more gold than Germany and the IMF combined but not, as originally stated, more than twice as much.]

We have the gold. Bringing back the gold standard would not be very hard to do.

Trump’s politically unique intuition that “We used to have a very, very solid country because it was based on a gold standard” is no trivial matter. It is true. And as I have written elsewhere:

Marc Levinson writing recently in The Wall Street Journal provides a very pessimistic view for the American Dream, “Why the Economy Doesn’t Roar Anymore: The long boom after World War II left Americans with unrealistic expectations, but there’s no going back to that unusual Golden Age” [He wrote:]

“People who had thought themselves condemned to be sharecroppers in the Alabama Cotton Belt or day laborers in the boot heel of Italy found opportunities they could never have imagined. The French called this period les trente glorieuses, the 30 glorious years. Germans spoke of the Wirtschaftswunder, the economic miracle, while the Japanese, more modestly, referred to “the era of high economic growth.” In the English-speaking countries, it has more commonly been called the Golden Age.

[…]

“The Golden Age was the first sustained period of economic growth in most countries since the 1920s. But it was built on far more than just pent-up demand and the stimulus of the postwar baby boom. Unprecedented productivity growth around the world made the Golden Age possible. In the 25 years that ended in 1973, the amount produced in an hour of work roughly doubled in the U.S. and Canada, tripled in Europe and quintupled in Japan.

[…]

“Ever since the Golden Age vanished amid the gasoline lines of 1973, political leaders in every wealthy country have insisted that the right policies will bring back those heady days. Voters who have been trained to expect that their leaders can deliver something more than ordinary are likely to find reality disappointing.”

Levinson, whose column uses “Golden Age” as its leitmotif, strangely fails to make the connection between, or even explore, the fact that the era he calls the Golden Age correlated precisely with America (and the world) being on a form of gold standard, particularly the modified gold standard known as the Bretton Woods System. (Bretton Woods had the inherent flaw of using the dollar as an international reserve asset but, until that flaw undermined it, it served equitable prosperity.)

What would be the outcome of Trump’s following his instincts and going for the gold?

Prosperity, that’s what.

Former Fed Chairman Alan Greenspan just provided a barely noticed Big Reveal. In an interview with the World Gold Council’s Gold Investor Chairman Greenspan, stating “I view gold as the primary global currency,” went on to explicitly reveal, for the first time to my knowledge, that “When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul, who was a very strong advocate of gold. We had some interesting discussions. I told him that US monetary policy tried to follow signals that a gold standard would have created. [Emphasis supplied.]

The period of “following signals that a gold standard would have created,” called the Great Moderation under President Clinton, was one of the most equitably prosperous in modern American history. That era saw the creation of over 20 million jobs. Robust growth converted the federal deficit into a surplus. It was, if only virtually rather than institutionally, a golden age.

After the Fed abandoned its Great Moderation America experienced almost no net job creation under President George W. Bush and very mediocre job creation under President Obama. Sad!

I want the American Dream back. We all do, very much including President Trump.

How might President Trump go about turning this around? He has a unique opening to forcefully pivot America toward epic prosperity.

As Paul-Martin Foss of the Menger Center astutely points out the Federal Reserve Board currently has three vacancies. If Trump were to fill those vacancies with three sophisticated gold standard advocates from the short list of Lewis E. Lehrman (whose eponymous Institute I formerly served), Dr. Judy Shelton (who served as an advisor on his presidential economic transition team), former presidential candidate Steve Forbes, and John Allison, former CEO of BB&T (preferably as vice chairman for regulation) the president would create a super “beachhead team” at the Fed to seriously restore equitable prosperity.

These appointments would be the safe and sure first steps out of economic stagnation for America. Couple these with a White House “Team B” to plan the enactment of the Jack Kemp Gold Standard Act and removal of the regulatory and tax barriers to using gold as currency. Then watch an American economic miracle take place.

Mr. President: “No such thing as a global currency?” The dollar is the global currency. Want prosperity? Heed Chairman Greenspan and do not just view but restore “gold as the primary global currency.” President Trump: replace the dollar with gold as the global currency to make America great again. We have the gold.

Source Forbes.com

Found at http://fromthetrenchesworldreport.com/

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Check out more contributions by Jeffery Pritchett ranging from UFO to Bigfoot to Paranormal to Prophecy

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Total 10 comments
  • Robot999

    “We have the gold”. Really? Just who is “we”?

    If this is true, then why have we not been “allowed” to audit the gold for many (many) decades? I don’t believe that “we have the gold”.

    • Just me

      Plus, if we go to a gold standard the stock market would crash and most people who are invested will be screwed.

  • Man

    hahaha no. There isn’t enough gold to cover the value of the dollars in use.

    • Just me

      Yes – therein lies the problem – the dollar will become worthless as will the overinflated stocks which are based on worthless dollars. Perfect way to crash the economy.

  • Canderson

    Bad move right now, then the people will starve to death, and the Donald is a fraud. Alan Watt says it is like that, left or wright always the same goal, the only thing that changes is who is the “care taker”, the rat , the undead Apparatchik.

    • Canderson

      Ha, perhaps today the only thing I want is a correct Kill-list top-down, they are killing us, we should kill them for that.

    • Canderson

      Gold standard too little “money”, “legal tender” in circulation, see Bill Still and especially Lyndon LaRouche on that. The people will not afford it and will starve to death, and they want this of course.
      Agenda 21 2030, the psychopaths in control, means forever austerity, cause they want it all. When they killed most of the common people, then they go against each-other, 666 was NERO a psychopath. All will die they are the ancient a-bomb 666. We do not need them at all, identify and remove, or whack. The last time sane people hold the utterly power perhaps were under the Hunter gatherer system. Most of the writings are written by sane people, not psychopaths. (ancient writings that became part of the Bible)

  • Godzilla

    We need to industrialise the nation again. We need far fewer regulations and far fewer taxes to entice business to operate on American soil and hire legals rather than hire illegals, use robots or keep the plants overseas. I see ex communist countries kicking “capitalist countries” ass lately, actually for decades. I am talking about Poland, Bulgaria, china, Vietnam. Also traditionally poor countries that were not communist like india and Bangladesh. Not to mention Taiwan, south korea, Malaysia. Why are they thriving and we are not?

    As for going back to the gold standard, I wonder how much gold actually exists at fort knox, and if its really gold or tungsten bars plated with gold. When was the last time that place got audited? I guess at the same time the federal reserve got audited too……..NEVER!

    • Andy

      the two go hand in hand – the unaudited fed and the unaudited gold

      end the fed, disown all debt owed to the fed, end the petro-dollar and bring back precious metal backing

      as mentioned, there isn’t enough gold on earth to back our monetary system, but there is enough silver

      perhaps a two-tiered system would work,, gold for public sector and silver for private sector

  • Wity

    Dropping the US$ as world reserve currency will initially cause mayhem for America and China
    the two biggest threats to mankind…

    This will force these two big bullies and their pal’s the NWO/Brit Commonwealth and the European
    Union to drastically cut military spending and funding of Anti-Allied ISIS/Israel/and Arabia/NWO…

    Forcing these thugs to radically cut crude oil and related product prices…
    restoring a balance to the worlds economies….

    lnstigated wars for control of crude oil will end creating a new equilibrium in the world
    and ballance….WITH MILLIONS OF NEW JOBS AT HOME TO RESTORE ECONOMIES…..

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