Wednesday, May 20, 2020
We understand that the dollar has been holding up in respect of other fiat currencies. In the past we have compared that illusion to an airplane passenger who is on an airplane that suddenly starts losing altitude and who takes comfort from the fact that the passenger sitting across the aisle is also losing altitude. We understand that even in a classical gold standard, the price of gold can fluctuate. A sustained drop in the value of the dollar, though, in our estimate needs to be addressed.
In that respect, it looks to us like Mr. Trump is approaching a moment of truth. He has yet to address the gap between his platform promises of 2016 on monetary reform and his current policies. The exigencies of the pandemic will cover some sins. Not all of them. The latest sounding by Rasmussen suggests that on the economy, voters repose more confidence in Vice President Biden. Could that be because the classical value of America’s dollar has been plunging?
A grand idea. I suspect the US will have to undergo a lot of torment, however, before it sees the wisdom of a gold standard. "Modern monetary theory" seems much more likely to me, even though, as Peter Schiff says, it's neither modern nor a theory. The idea of paying for government by printing money is ancient and we already know it doesn't work, so it's not a theory.