Gingrich: Say, that gold standard looks like a pretty good idea

Could Newt Gingrich steal some of Ron Paul’s thunder to generate enough support to beat Mitt Romney in South Carolina? It might be difficult to swing Paul voters to another Republican candidate, even in the general election, but it looks like Gingrich plans to give it a try.  Daniel Halper at The Weekly Standard reports on Gingrich’s decision to raise the issue of a return to “hard money” and the gold standard:

“We need to get our house in order. And we need to vaccinate ourselves against foreign contagion. The correct answer to the Euro is not to spend more American money propping up the Germans who prop up Southern Europe. The correct answer is to figure how we seal our banks off; how we make sure we protect ourselves and then say to the Europeans: you have a problem and you need to solve it.

“Part of our approach ought to be to reestablish something Ronald Reagan did in 1981 and that is to have a Commission on Gold to look at the whole concept of how do we get back to hard money.

“We need to repeal the Humphrey-Hawkins Act. We need to say to the Federal Reserve: your only job is to maintain the stability of the dollar because we want a dollar to be worth thirty years from now what it is worth now because that optimizes saving and investment because people know what they are going to back.

“The very purpose of founding the Constitution was landowners and property owners who did not want inflation. And they felt that under the Articles of Confederation they were increasingly getting inflated paper money.

“Hard money is a discipline.  It means you can’t just hide from your problems; you’ve got to solve them.  And you can’t inflate away your difficulties; you actually have to work them away.  But I think it is very important for us to understand in finance that the entire contraption that has been built up over the last thirty or forty years has so much paper in it, so much debt, so much leverage, that we probably have a fifteen or twenty year period of working our way out of it.

“And yet, the alternative is to get sicker and sicker and sicker.”

If that sounds familiar, it’s because Ron Paul has been offering that policy for decades, both on the stump and in his newsletters (the latter of which contained a whole lot of other less-savory notions, too).  Gingrich doesn’t quite go as far as to call for a return of the gold standard; a careful reading of this statement reveals a pledge to study the issue, as Reagan did in the 1980s.  Unless my recall is faulty, though, that effort in 1981 didn’t produce any action on behalf of Reagan or the Republican Party to push through a move back to gold or any other hard-money system.

Putting aside the historical allusions, though (there were a lot of reasons that the Articles failed, and inflation was hardly the worst of them), this could be dangerous ground for Gingrich.  He already has a reputation for offering “bold” ideas that few people actually want.  Outside of the Paul contingent, most people would not identify the gold standard as one of the most pressing goals for the US.  In theory, it sounds like a great idea, and Gingrich is correct that it would put serious limitations on government — but we would have to implement those limitations prior to a return to the gold standard under current conditions, and the limitations are an end unto themselves without having to add the complication of explaining a return to the gold standard on top of it.

Still, it’s a clever little signal to Paul’s supporters, at relatively low risk, since only Paul would want to extensively debate the gold standard in this cycle.  It’s a wink that says, When you realize that your candidate doesn’t stand a chance, remember who agrees with Paul’s fiscal policies, as well as a hint to other Republicans that Gingrich could keep Paul’s voters in the tent in November.  We’ll see whether that helps Gingrich in South Carolina.