HUNTER: Obama's golden opportunity

I never heard so much nonsense in my life. Tying the dollar to gold will go back to the days when the dollar was hamstrung. Let's find out more ways to drive us into a Depression, shall we?

Mr. Hunter's suggestion flies in the face of basic monetary theory. It will not work in the long run for at least three reasons. 1. The nostalgic longing for a “hard” currency is unrealistic. The real trading value of gold fluctuates with supply and demand just like every other good. Gold’s value is much more fluid now than in former times. 2. Money is merely a means of exchange. It is well established that the supply of money is the most practical control. Whenever we give in to the pressure for “easy” money to expand the economy, we eventually overextend ourselves and suffer the consequences. The recent economic downturn is no exception. 3. Tying money to gold (or silver) means a promise to deliver. But where is the promise not to print too much? When people demand gold instead of paper, coins and cyber-money, the rush on banks will be horrendous. Banks will close their doors and fold very quickly. No Midas-touch will extricate ourselves from the current mess. The real answer is common sense: live within your means; don't borrow and spend too much. If Obama could get the government to do that, it would be magic.

Stocks rallied the day the Fed cut rates to 1.5%. Rates were at 1.5% four years ago. Can anybody argue that the runup in rates and the subsequent rundown really accomplished anything? For those happy with the current currency system, is this really what you wanted? Anyone can tell you there were political problems with the gold standard in its various incarnations, but the primary problem was the difficulty of manipulating it in service of novel ideas about levering monetary policy to tune the economy. Especially when those ideas were used as an alternative to actual governing such as limiting tax and limiting spending. Mr Charles Kannal in spite of himself uncovers the answer: "The real answer is common sense: live within your means; don't borrow and spend too much." Without tying the dollar to gold or some similarly tested physical standard, there is no way to really limit the government over the long term. The temptation will always be there to manipulate the currency to achieve a goal that is distasteful to legislate.

Obamba is more likely to turn over economic sovereignty to the IMF in a New York Minute. To quote my favorite Senatorial Dunce, now VP elect: Gird Your Loins.