August 26, 2011
In 1965, former French president Charles De Gaulle called for an international return to the gold standard. De Gaulle said a monetary standard based on gold would keep government spending in check and prevent the sort of economic crisis we are now enduring at the hands of the money masters.
“The fact that many countries, accept as a principle, dollars being as good as gold, for the payment of the differences existing to their advantage in the American balance of trade,” said De Gaulle, “this fact, leads Americans, to get into debt and to get into debt for free at the expense of other countries. Because what the US owes them it is paid, at least in part, with dollars the are the only one allowed to emit. Considering the serious consequences a crisis would have in such a domain, we think that measures must be taken on time to avoid it. We consider necessary that international trade be established as it was the case before the great misfortunes of the world, on a indisputable monetary base, and one that does not bear the mark of any particular country. Which base ? In truth no one see how one could really have any standard criterion other than GOLD !”
De Gaulle later said that the United States “exports inflation” and should agree to major reforms of the world monetary system and help to establish a pure gold standard in international finance.
Richard E. Caves, at that time the chairman of the Economics Department at Harvard, said “De Gaulle doesn’t know what he’s talking about” and lauded “reforms” instituted by the IMF and praised the idea of special drawing rights for countries that faced serious deficits in their balance of payments.
De Gaulle’s gold standard “scheme” was “wildly irrational,” Caves said. Paul A. Samuelson, professor of Economics at M.I.T., added that De Gaulle’s chief advisor was “an idiot” for suggesting such a proposal.
Fast-forward more than forty years. Gold is climbing toward $1,800 and ounce. Central banks are now abandoning the dollar as the world’s reserve currency. The United States has lost its top-tier AAA credit rating from Standard & Poor’s on concerns over budget deficits and a no-end-in-sight debt burden. Economic growth is anemic at best. Unemployment keeps climbing.
Meanwhile, the boss of the privately owned Federal Reserve, Ben Bernanke, has warned government not to cut spending “in the near term,” thus guaranteeing a continuation of unsustainable deficit spending and debt.
It makes you wonder – who was the idiot? De Gaulle or the academics at Harvard and M.I.T.?
This article was posted: Friday, August 26, 2011 at 12:27 pm