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Would a Gold Standard Encourage Investment and Saving?

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    Lehrman Institute chairman Lewis Lehrman on returning to the gold standard.

  • Duration 5:00
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It's.

Well gold getting another -- today by news that central banks here and in Europe were closer to printing more money to buy more debt.

A -- news may have boosted gold in the markets in the short term our next guest says that it could be devastating for our economy.

In the long term it can only be stopped by returning to a gold standard -- is Louis -- Chairman of the Letterman institute and a former partner at Morgan.

Standley and also mentioned as possibly a commissioner in this GOP gold commission if if Romney becomes president have you heard anything about that.

While we already neo Wall Street Journal I think it was Seth Lipsky -- and his head who drew attention to the fact that.

The Republican platforms calling for a new go commission of -- on the Reagan go commission of 1980 -- -- Her eight part and -- at the end of the day decided that it wasn't a good idea to go to the gold standard right.

Well one has to look at the composition of the committee they were 22 named it was controlled substantially by the secretary of the treasury.

Don Regan and and Schwartz who of course both were opposed to the gold standard.

Then the and he was the President Reagan himself was very sympathetic.

To the gold standard indeed he made a 102 spot.

During his campaign for the presidency.

Endorsing.

Going forward David not returning going forward to a modernize -- -- -- We went to a gold standard it would be.

Absolutely the reverse of what we have now which are central banks around the world including the Federal Reserve.

Pumping up the or trying to pump up the economy by pretty more cash it would put an end of that.

Would have put a Pall over our markets which seemed to like called us.

Money pretty.

Well -- there's an old phrase that it it precedes the Fed and also precedes the remarked you know I don't fight the Fed its money makes America.

Can of course that was -- -- Wall Street saw preceding the Federal Reserve look the Federal Reserve is established in 1913.

And one of the key persons who was the gold Democrat Carter -- the great legislator from Virginia.

And the design of the Federal Reserve System was too.

Support the gold standard.

And that is in fact or what -- what was the case from the very very beginning so the founding of the Federal Reserve System was coincident with the gold standard.

And was.

Only meant to create a slightly more elastic currency.

All right well -- since since this -- recent financial crisis began back in 2008 the Federal Reserve.

Has gone on a money printing spree right here in the United States -- about two -- anywhere from 2.4 trillion to two point seven trillion.

Dollars in order to buy up including a lot of government debt directly.

They say that hey look so far we don't have any inflation so there's no harm and to which you say.

Well the reason why there is up -- well 2% inflation supposed to even a greater level inflation is that.

There is such a panic in Europe that everybody was racing out of the -- up.

Into the dollar.

Holding the dollars that the Fed was created.

Instead of -- them the same in the United States because of the economic.

Situation in the states many people are using the dollars that they received.

Indeed some of them being printed by the Fed to repay debt.

Instead of consume.

So the whole idea that we are not cooking inflation.

In the oven in the long run is a false idea.

Key -- that the gold standard and that's going forward to a modernize gold standard.

Is that it is a prescription for long term economic growth under the gold standard the American economy grew.

At 4% compound -- annually.

From the birth of the republic practically right up until 1971.

Whereas the economy under the Federal Reserve's quantitative easing in the last decade.

Has been growing at one point 7% you don't have to be -- a rocket scientist to choose between.

The a stable dollar.

-- stable general price level and economic growth engendered by confidence in the future.

How would it shift very quickly because we gonna go but how -- shift to the gold standard affect the price of gold right now would you would you freeze gold at the current.

Dollar price.

The president would have to announce we're going forward the gold standard.

There would be -- two or three perhaps even a four year transition where everybody.

To reorganize their own affairs not very much but at the margins.

In order to adapt the fact the dollar was no longer going to be a political football in the hands of the Federal Reserve's quantitative easing program.

That would be the transition and at the end of that period.

The congress which is a lot of loans given the power by the constitution to coin money and regulate the value -- they're up in the states are prohibited from making anything but.

-- silver beleaguered legal tender the congress would then stipulate.

In law.

The statutory value of the dollar and the dollar would be as good as gold once again.

There's a lot more to talk about this subject and if there is a president Romney you'll hear a lot more from this man who will be on the gold commission good to see a -- good to -- -- being here appreciate thank you the leverage.

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