Gold: the Final Standard (2017), my third book about monetary topics, is now available in both eBook and print formats. I thought I would say a few words about how it came about.
It forms the third book of a sort of “gold trilogy,” as I see it, following Gold: the Once and Future Money (2007) and Gold: the Monetary Polaris (2013). Things were not really planned out that way, but I have the sense that it brings a level of completion to the topic. There will likely be more books in the future, some with a monetary theme, but they will likely be more in the nature of specific standalone topics.
Regular readers will find a lot of material in the book that has appeared on the website since the beginning of 2016. Contrary to what you might think, the book does not recycle the website material. Rather, it is the other way around: the website material is based on the research and writing of the book. It served an important purpose, to allow me to organize my thoughts and assemble data, in a somewhat casual and unstructured format. Also contrary to what you might think, the website material has far more detail, as it is easier to look into each topic in greater depth, and also add a lot of colorful graphics and so forth.
The structure of the book is historical. The first part is a simple narrative of gold and silver money used around the world from the earliest times. What I discovered, from doing this research, is that gold and silver money was much more ubiquitous than I imagined. As early as 3100 B.C., the Egyptian pharaohs were making standardized gold ingots, stamped with the seal of the pharaoh, for monetary trade. They were already very close to what we might call a “coin.” Certainly by 300 B.C. or so, all of the centers of civilization from Celtic Britain to China were using gold and silver as money. Even when payment was often in the form of other things, gold and silver — in essence, a unified system I called the “gold/silver complex” — formed the core of the system.When Rome fell in the West, the Eastern Roman empire (now called the Byzantine Empire), continued another thousand years with a highly reliable gold solidus. The solidus later became the basis for the Arab dinar, Italian florin and ducat, and high quality gold coinage used throughout India. I think that people involved in these topics should appreciate just how ubiquitous gold and silver have been, in an unbroken line from Sumer and Egypt up to the twentieth century. Plus, I think it is interesting just to learn about it.
One reason for this book was to address the many claims and interpretations that are out there. I have mostly avoided this, because when you are laying out new concepts, you don’t want to confuse these already-complicated topics by wrestling with other people’s mixed-up ideas. However, I found that it was eventually necessary to address them specifically. Now that a usable foundation has been laid in the first two books, we can use that as a basis to examine others’ claims and interpretations. It would be impossible to rationally examine the mechanisms in use during the Classical Gold Standard period, for example, without the detailed explanation of basic operating processes, and related concepts, in Gold: the Monetary Polaris. Delving into the existing academic literature regarding the Classical Gold Standard period is a strange experience. It is like visiting an insane asylum. A single paragraph can have such a convolution of mistaken notions that it is difficult to treat it in any kind of rational way at all. During the process, I got the distinct impression that at least some of this was on purpose. Back in 2011, I looked at a fictional account, written in 1974, of what the world’s uber-elites might think about.
It had this passage, which I thought was nice:
The power of our finance capitalist money cult rests on a similar secret knowledge, primarily in the field of economics. Our power is weakened by real advances in economic science (Fortunately, the public at large and most revolutionaries remain totally ignorant of economics). However, we established money lords have been able to prolong and even reverse our decline by systematically corrupting economic science with fallacious and spurious doctrines. Through our power in the universities, publishing, and mass media we have been able to reward the sincere, professorial cranks whose spurious doctrines happen to rationalize in terms of “common good” the government supported institutions, laws, and economic measures upon which our money powers depend.
Certainly there are useful idiots. But, also I think there is intentional disinformation going on. Human stupidity alone is not, in my opinion, capable of producing these effects. But, anyone who has spent a little time looking into “cultural Marxism” (search the term on YouTube if you like) can see the pattern of intentional corruption in virtually every sphere of human activity, since the late 19th century. If you are a little adventurous, you might look into the change in the tuning of musical instruments, from A=432hz to A=440hz, that took place between about 1915 and 1940. To assume that economics is somehow immune to this is not credible. You would think that would be on the top of the list.
Anyway, I tried to clear away some of the nonsense and give at least a brief picture of what was going on during the 1870-1914 period — not just in abstract terms, but also in real-life terms. I particularly like to look at central bank balance sheets directly. The Bank of England recently released weekly balance sheet data from 1845-present. The 1910 Senate Monetary Commission reports actually have weekly balance sheets for the Bank of France and Reichsbank, although I used the annual data instead. You learn a lot from looking at what was really happening. It is like looking at, for example, a deer. Just look at it. You will just naturally understand what it looks like, how it moves, and fundamentally what it is, in a way that would never be possible from just talking about a deer in the abstract. Also, if anyone came by who told you that a deer was six inches tall and blue, then you would immediately know that either they didn’t know what they were talking about, or that they were trying to fool you. I also have a little data on the exchange rates of floating currencies during that time, bond yields, and other interesting bits that help take the period from the realm of fable and fairy tale into the realm of practical history. There are a lot of gold standard advocates who are enthusiastic fans of that era, but also know nearly nothing about it — from where could they learn it? We will need at least a few real experts. What I have done here is very preliminary. I hope some enterprising young academic takes this ball and runs with it, although that never seems to happen.
The Interwar Period turned out to be a major focus of the book. The real material, for the enthusiasts, is laid out in the website posts of last year. The chapter in the book is more like a summary, you could say. I think there is a lot of value in cleaning out this basement. Actually, I’m still at it this year, as there is apparently more to do. Once again, without the foundation established in Gold: the Once and Future Money and Gold: the Monetary Polaris, we would not have the tools to make sense of the various claims that have been made about that time.
Although people disagree about the Interwar Period, there is actually a lot of consensus about the Bretton Woods period. People seem to understand that it was a matter of trying to have both a “domestic” discretionary monetary policy, and also a fixed value policy — two incompatible approaches. Nevertheless, there is an odd hesitancy, as if people don’t want to then move on to the natural conclusions of this understanding. One conclusion is that the people involved at the time were hopeless incompetents. Academics, in particular, are loathe to admit that the economists of that time were as inadequate as they really were. It would invalidate their own credentials. Or, at least they seem to think so. Also, I kick around the gold standard advocates of the time. Today’s gold standard fans really need to move beyond this. Things are so much more sophisticated now.
Lastly, I try to give a broader, overall picture of what our era of floating fiat currencies has been like. I have more like a historical blow-by-blow in Gold: the Once and Future Money, with a U.S. focus, so here I wanted to look at more of a statistical or global view. One thing we find is that, if you get outside a few major currencies (dollar, pound, yen, mark/euro), there are a whole lot of currency disasters. All of Latin America sank into hyperinflation during the 1980s. All of post-Soviet Eastern Europe and Central Asia did so in the 1990s. We also had the Asia Crisis of 1997-98, blowing up several promising high-growth economies. Even Germany, Britain and Japan had wild foreign exchange swings, none of which was very healthy. Turkey, Greece, India and elsewhere had decades of chronic currency decline. This was true even during the “Great Moderation” period begun by Paul Volcker and overseen, in particular, by Alan Greenspan, who has been a little more vocal recently that he was deliberately targeting the dollar gold price during that time — in effect, implementing a sort of crude gold standard system. In short, if the Floating Fiat era can claim any success at all, it was only because someone was intentionally mimicking (poorly) a gold standard system! I’m hoping that some historian can get Greenspan to open up about this before he dies or gets too old.
I hope the book will serve as an effective standalone history for the intelligent lay reader. But, I also wanted to give the enthusiasts, who have read my previous books and this website, plenty of new material to chew on. I certainly feel like I’ve made new progress, during the research and the process of writing this book and the related website items. For some reason, people think “they know it all already,” and there’s nothing to do but repeat old nostrums. If anything, the work that has been done so far seems very preliminary to me. We have four hundred biographies of Abraham Lincoln, but still not one good and correct book about the Classical Gold Standard era (I think Gallarotti’s book had a lot of merit, but was something of a specialist work), or a coherent and comprehensive account of the Great Depression. There have been some very good books coming out recently with a historical/economic theme. I would note Jim Grant’s The Forgotten Depression: 1921: The Crash That Cured Itself (2014), and JFK and the Reagan Revolution: A Secret History of American Prosperity (2016), by Brian Domitrovic and Lawrence Kudlow. I also thought that Amity Shales’ The Forgotten Man: A New History of the Great Depression (2008) fit this pattern of both historical and economic sophistication. We could use another dozen talents with the abilities of Grant, Domitrovic, Kudlow and Shlaes, balancing economic sophistication with careful historiography and literary skill. They would have plenty to do.