Trump and the Goldbugs – Clutching at Straws
Many moons ago I headed a thinktank, in fact it was THE thinktank for Supply-side Economics, and it was buried deep in the heart of New Jersey. This organization had as its guru in residence one Jude Wanniski and used to style itself as having invented/guided/inspired the Reagan Administration’s tax cut policies which were one of the most visible manifestations of Supplyside Economics. This school of thought is not given much airtime these days, but it was really just an Americanisation of the Austrian School of Economics with a few added bells & whistles (and ad libbing). One of its chief tenets was a desire to return to the gold standard though this did not feature anywhere prominent in Reaganomic discourse.
I was led to think about this work experience (which was bittersweet indeed) in recent weeks for it was ten years since Hurricane Katrina, a rather cataclysmic event that coincided with the demise of Jude Wanniski. Further prompt to these thoughts was the rising “star” of Donald Trump, a character representing one of the more bizarre mainstream candidacies for the US presidency in living memory. Indeed, while Reagan was an actor turned politician (a rarer commodity), Trump is a “businessman” turned wannabe politician (theoretically a more conventional segue from one activity to the other). Indeed in this he most resembles Herbert Hoover, though fans of Hoover would reel in horror. We might add that Herbert Hoover was a geologist who had much to do with developing the Zinc mining industry in Australia, amongst other things, while The Donald’s interaction with precious metals is largely linked to the global demand for gold faucets.
So I pondered what Jude Wanniski might have thought of the Trump campaign. Ever one to live in hope that a post-Reagan candidate would pick up the sword of Supplyside to march into battle he might initially have been thrilled. He had adopted Steve Forbes in 1996 as a standard-bearer but that had gone nowhere. If the Sage of Parsippany found it tough to micromanage Steve Forbes, then steering Donald Trump towards orthodoxy would be like directing the marabunda, the great Brazilian army of leaf-eating ants. One is reminded of the Mother Superior’s plea of despair in Sound of Music, “How do you solve a problem like Maria?”, just replace Maria with Donald, and the problem multiplies by an order of magnitude. He is a veritable economic and policy “Shower Scene form Pyscho”. Thus far though he has not had to do much more to glean support than fire off wild and wooly soundbites on immigration, women and anything else vaguely in the firing line. Economics has been, putting it politely, a sub-theme.
It is said that patriotism is the last refuge of the scoundrel, but Dr Johnson had clearly not meet the goldbugs. The chatter in these circles is now that The Donald may be the Knight in Shining Suit for whom that they have long sought. He combines in one candidate the two things they most cling to… a character with no regard for running up debt whatsoever and yet at the same time a discourse on returning to the gold standard to counteract monetary debasement. As a headline in the National Review Online put it “Donald Trump Loves Gold, as a Matter of Home Decor and Monetary Policy” and then went on to quote him saying ““There is something very nice, about the concept of having a “solid” country filled with money backed by bullion”. Simultaneously he combines the malaise and the cure.
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Politicians before have moved their lips in service to the concept of a gold standard and then wimped out when a partner of Goldman lands at the Treasury and he, and the head of the Fed, hit the White House to straighten out such erroneous thinking. We wonder though whether Goldman were pushing an aluminum standard when they owned all the warehouses in the world to store the stuff.. That we shall never know..
But back to the gold faucets.. I mean the gold standard.. while the gold bugs may be destructively testing their adult diapers with enthusiasm at the prospect, they fail to grasp that having yet another candidate who is a few sandwiches short of a picnic espousing their beloved credo actually casts it further into the outer darkness only inhabited by flat-earthers, birthers and the Palin family. Could one imagine Friedrich Hayek and Ludwig von Mises sharing a stage with The Donald to give credence to his economic policies? Would they even be allowed in, representing as they do “foreign elements”?
The broader public do not share the goldbugs affinity for the gold standard and indeed would probably prefer a more updated version of the old political saw, “a chicken in every pot” manifested as “a gold faucet in every bathroom”. Those with more bathrooms get more gold faucets! A gold standard, in theory does not need any more gold to be mined (it would just result in less proliferation of paper money) while a gold faucet in every bathroom would indeed create a phenomenal boom in demand for the output of gold miners and send the price of gold soaring (sounds inflationary to me, but what do I know!?).
Frankly in putting their faith in Donald Trump, the goldbugs are clutching at straws. It seems that every Presidential round since the dawn of time has to have one candidate that catches the imagination of the goldbugs and then fizzles and burns leaving mainstream thinking dominating the conversation. Indeed William Jennings Bryant in the 1880s spoke of the Cross of Gold, which is certainly more evocative that Trump’s plumbing fixtures. This phenomenon of pseudo gold hysteria is very much a US thing because I cannot think of any country where this appears in the campaign dialectic. It’s somewhat ironic though considering that it’s now over 40 years since the US left the gold standard. We could go all misty eyed over those decades before the final surrender in the Nixon years, but one might also recall that the concept of enough gold “backing” the currency was as illusory as the asset backing of certain casinos and resorts that shall go unnamed.
Isn’t it novel that no-one says “cobalt must have a savior” or that “zinc will soar if such and such is elected president”? If gold needs a Messiah (and we are not persuaded it does) then he (she?) will not come disguised with a frizzy comb-over. Messiahs should be made of sterner stuff..
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