In this piece, "Palimpsest of a gold standard," I expand upon some themes that I've posted here and there on this blog. I tied it all together by casting the move to Big Government as a revolution from above.
The shift was largely effected by people that conservatives called "limousine liberals" or "parlour pinks." Nowadays, they're known as über-liberals. If you want to see the process in miniature, the mayoralty of Michael Bloomberg will do.I end by saying that the Utah law has put the gold standard in the qualifying heats for the big-issue racetracks.
Getting rid of the gold standard, successfully impugned by the Great Depression, has been successful enough to make fiat money completely mainstream. Historically, this state of affairs is unusual. Back in the olden days, ordinary folks were more suspicious of those in power than we are today. Any suggestion that fiat money would be better than gold, would have been dismissed out of hand as a plot against the public – as white-collar coin-clipping. Two centuries ago, "they just want to steal our gold" would have received a huzzah in almost any pub.
There's a paradoxical pairing of facts when it comes to the gold standard's demise. Critics of fiat money, except for the excitable ones, have been proven right about the inflationary effects of fiat money. When the gold standard still prevailed, overall price stability was enjoyed for a hundred years. A dollar was a lot of money. There was still penny candy. Newspapers typically went for 2 cents on weekdays and 5 cents for the weekend edition. A cup of coffee cost a dime and the dollar stores of the time were five-and-dimes. A good suit could be had for twenty dollars.
Yes, fiat's critics have proved to be right about inflation. Juxtaposed, though, is the plain fact that ordinary people aren't up in arms about it. Had it not been for a surprise passage of a law in Utah, there wouldn't be any need to qualify the second statement. Fiat money is inflationary; people don't seem to care....
I have to say, again, that hardcore goldbugs who believe the public will never accept a gold standard until hyperinflation makes them change their ways have been somewhat rebutted by that bill. Hard as it is for some to believe, a step towards a gold standard can win popular support from the masses.