Neurosurgeon-turned-Presidential candidate Ben Carson has been under attack this week by our PC-enforcers in the media. While most of the media scorn has been directed at Carson’s defense of gun ownership following last week’s shooting in Oregon – Matt O’Brien of the Washington Post slapped at Carson for flirting with the gold standard.
In an article on Friday criticizing Jeb Bush for not condemning the gold standard harshly enough (Bush only offered a timid "I don't think so" when asked whether the US should make such a move), O’Brien highlighted some surprisingly sound comments Dr. Carson made earlier this week during an interview with NPR. While discussing the nation’s current debt, Carson said:
"[T]he only reason that we can sustain that kind of debt is because of our artificial ability to print money, to create what we think is wealth, but it is not wealth, because it's based upon our faith and credit. You know, we decoupled it from the domestic gold standard in 1933, and from the international gold standard in 1971, and since that time, it's not based on anything. Why would we be continuing to do that?”
Because of views like this, O’Brien dismisses Carson as not being a “candidate of serious policy.”
Unfortunately for O’Brien, he spends the rest of his column demonstrating that his own views on the gold standard, which he refers to as “the world’s worst idea today”, should not be taken seriously.
Along with offering the typical flawed-Friedmanite narrative of how the Federal Reserve’s dedication to preserving the gold standard, O’Brien is concerned about the impact a gold standard has on interest rates.
Without a hint of irony, O’Brien suggests that interest rates guided by the market simply lack the wisdom of our current PhD Standard:
"The question, then, is when gold actually does "want" to go up. And the answer is not when the economy would want it to. That's because the price of gold doesn't go up when the economy is overheating, and down when it's cooling off. If it did, then the gold standard would give us high interest rates when we needed them, and low interest rates too."
So O’Brien’s problem is with the fact that the market does not follow his Keynesian models on how interest rates should behave. Like most self-proclaimed “economic wonks” in DC, O’Brien can’t imagine a world in which the Fed is limited in what it can do to respond to a recession.
Perhaps it’s time for Mr. O’Brien to read about the Forgotten Depression.
And maybe Dr. Ben Carson needs a new addition to his wardrobe.