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Affluent Investor | April 27, 2017

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Memo to Donald Trump: The Gold Standard Will Guarantee 4 Percent Growth

Donald John Trump, Republican candidate for United States President (Photo by Gage Skidmore) (CC BY-SA) (Resized/Cropped)

Donald Trump, Republican candidate for President
(Photo by Gage Skidmore) (CC BY-SA) (Resized/Cropped)

In calling for 4 percent growth, Donald Trump hit a home run.

He has the right instincts. If he follows them he can turn this home run into a grand slam.

When Jeb Bush declared his candidacy, he did it in a speech demanding no less than 4 percent growth:

Growth above all. A growing economy, whether here in Detroit or throughout this country is the difference between poverty and prosperity for millions. If you want to close the opportunity gap, grow the economy. This is a principle that concentrates the mind.

If a law or a rule doesn’t contribute to growth, why do it? If a law subtracts from growth, why are we discussing it? And for what it’s worth, I don’t think the US should settle for anything less than 4% growth a year – which is about twice our current average. At that rate, the middle class will thrive again.

I applauded Bush’s declaration at the time in Forbes.com. But Governor Bush never provided the credible plan to get there which he also promised. He soon drifted off to other issues… and drifted down in the polls. Trump focused in on a commitment to job creation and making us rich again, and he rode this pledge to the nomination.

Trump now has unveiled such a plan. His commitment to 4 percent is highly credible. There are credible components in his proposed tax rate cuts and in peeling back oppressive and pointless federal regulations that stifle economic growth. But wait. There’s more.

It is heartening that Trump now is tackling the Fed. Monetary policy has a, well, HUGE role in job creation. The Fed is at the monetary throttle and has been, well, throttling job creation for years. To make America great again, the Fed must mend its ways.

But how?

Trump’s latest pronouncements on the Fed have caused a lot of controversy and even confusion. That’s probably because he is listening to economists rather than his own very good brain. It would be brilliant for Trump to consult his own brain on this and go with his instincts.

As I wrote, also at Forbes.com:

Michelle Jamrisko, a reporter for Bloomberg News, was among the first to notice this. Last month she reported Make America Gold Again: Calls for Everyone’s Favorite Standard Are Back Again. Jamrisko astutely reported that Donald Trump, the presumptive Republican presidential nominee, and Ted Cruz, the runner up, expressed sympathy for, or actually campaigned on, the gold standard:

“Ted Cruz, in one of the early candidate debates last year, said the Fed “should get out of the business of trying to juice our economy and simply be focused on sound money and monetary stability, ideally tied to gold.”

[…]

“Then there was Donald Trump. ‘We used to have a very, very solid country because it was based on a gold standard,’ he told WMUR television in New Hampshire in March last year. But he said it would be tough to bring it back because ‘we don’t have the gold. Other places have the gold.’

One also well might take note of Trump’s comment to GQ:

‘Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money.’

Trump’s good brain hit a grand slam when he said, it would be “wonderful. We’d have a standard on which to base our money.”

Unfortunately his policy advisors apparently have not yet taken the opportunity to advise him that we have the gold and it would be easy to do. As I noted in the same column, we have the gold:

America, Germany and the IMF together have about as much gold reserves as the rest of the world combined. America has well more than that of Germany and the IMF combined.

And it would be easy to do. From yet another Forbes.com column:

In 2010, at Fox News Opinions I called Kemp’s Gold Standard Act of 1984 – co-sponsored by, among others, then-Reps. Newt Gingrich, Vin Weber, Connie Mack — Kemp’s “Unfinished Symphony.” And as I wrote in The Hill’s Congress Blog in 2014, [The] Spirit of Jack Kemp rides again:

“As a result of neglecting Kemp’s demand for ‘good money,’ choosing instead the seductive but bad road of ‘cheap money,’ job creation — and upward mobility by workers — slowed to a snail’s pace.

“Kemp’s Gold Standard Act, the missing link for restoring job creation and equitable prosperity, is even more important today than it was when first introduced.  Want more jobs, better jobs, stable prices, and a quickly diminishing deficit — and happy voters of all parties?

“Look no further than the Gold Standard Act.  The Spirit of Jack Kemp rides again.”

Just enact the Jack Kemp Gold Standard Act of 1984 and then have the Treasury secretary carry out its simple measures. Not very hard. Not even hard.

As I also wrote in Forbes.com:

Trump’s prospects for winning the presidency would benefit from elevating the gold standard as a campaign issue.  According to a 2011 Rasmussen poll 44% of the 1000 likely voters polled favored the gold standard. Only 28% opposed.

The gold standard unites the GOP. This is a stated Trump goal.  (Corey Lewandowski, call your office!) It enjoys strong support from mainstream Republicans, conservatives, and tea partiers.

Bonus: the gold standard splits the left. Rasmussen discovered that gold enjoyed outright majority support of African Americans and members of labor unions. The ethnic and labor left, unlike the nomenklatura left, favors gold. These are two major Democratic constituencies crucial to Trump’s electoral strategy.

The gold standard is great policy.

It is also great politics.

Trump intuitively grasps this.

Four percent growth, fairly divided (through more jobs and higher wages), is the very essence of the American Dream. Trump can pull off an electoral grand slam, followed by amazing Prosperity-And-Justice-For-All, by going with his own good brain.

Let’s stop muddling about with economists’ Jabberwocky on whether or not the Fed should raise interest rates (if it even can, a credibly disputed proposition). If Trump goes with his own good brain and takes his own strong stand to make America great again through the gold standard, he will dominate this debate. He will unite the right, split the left, and pocket 270-plus electoral votes.

The gold standard is key to that 4 percent growth with everyone getting a fair share. Propounding the gold standard in a high profile forum — like the upcoming presidential debates — would make a giant addition to Trump’s popularity. The gold standard offers a giant step toward making America great again.

 

Originally published on The Pulse 2016.

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