by Ralph Benko
Amid an ongoing decline in the price of gold, a major brawl recently broke out in the elite media over … the gold standard. What is this free-for-all all about? And why does it matter? It matters because… the gold standard finally has demonstrated that, after a long eclipse, it is being taken seriously in elite (if not uniformly polite) company.
Paul Krugman, in a blog entitled Cranky Old Men, attacked a Sunday New York Times jeremiad by former OMB Director David Stockman. Stockman’s tirade, in fact, was more reminiscent of Allen Ginsberg’s Howl — “who burned cigarette holes in their arms protesting the narcotic tobacco haze of Capitalism … Moloch! Solitude! Filth! Ugliness! Ashcans and unobtainable dollars!” — than of an op-ed.
And yet, Krugman’s response possessed all the persuasive power of a 14-year-old’s sarcasm: “It’s cranky old man stuff, the kind of thing you get from people who read Investors Business Daily, listen to Rush Limbaugh, and maybe, if they’re unusually teched up, get investment advice from Zero Hedge. Sad.”
Matthew O’Brien of the Atlantic Monthly, playing Robin to Krugman’s Batman, botched a rescue operation. O’Brien got his facts badly wrong and came across as a propagandist, or apologist, rather than a serious analyst. O’Brien concluded, in The Atlantic Monthly, that “The gold standard didn’t save us from dystopia. The gold standard was dystopia.” Wrong. O’Brien was called out by the centrist Bloomberg and the center-right Forbes.com, his reputation bruised, for concocting a counterfactual counter-narrative.
First O’Brien blood was drawn by Matthew C. Klein at Bloomberg, with The Gold Standard Wasn’t So Bad. This was promptly and smartly followed, contradicting without explicitly mentioning O’Brien, again in Bloomberg, by Gold Bugs Had the Best Monetary Rule by Caroline Baum. O’Brien’s total demolition was effected by Forbes.com’s Prof. Brian Domitrovic’s Trashing the Gold Standard Is Now the Stuff of Amateurs and in substance although not by name by Forbes.com’s Nathan Lewis in The Correlation Between the Gold Standard and Stupendous Growth is Clear. Lewis, putting the wooden stake into the undead heart of O’Brien’s thesis: …