Will the Republicans Be Returning to Gold?

A gold commission may be added to Mitt Romney's Republican Party platform for the November 2012 elections, according to the Financial Times.

Such a commission was held under a previous Republican administration, slap-bang between the 1980 and 1984 elections in fact. So let's compare and contrast the Republican National Convention's platforms which straddled that committee.

July 1980 – nine years after the United States formerly abandoned the dollar's gold peg, and with inflation racing since then to hit untold peace-time rates near 15%, Ronald Reagan's platform actually make no mention of "gold" by name. Instead, the soon-to-win-office Republicans say that:

"One of the most urgent tasks in the period ahead will be the restoration of a dependable monetary standard – that is, an end to inflation.

"Unfortunately, Mr. Carter and the Democratic Congress seek to derail our nation's money creation policies by taking away the independence of the Federal Reserve Board. The same people who have so massively expanded government spending should not be allowed politically to dominate our monetary policy. The independence of the Federal Reserve System must be preserved."

Four years of power later, however, and after two deep recessions, and one Gold Commission – which found against a return to gold...

"The Federal Reserve Board's destabilizing actions must therefore stop. We need coordination between fiscal and monetary policy, timely information about Fed decisions, and an end to the uncertainties people face in obtaining money and credit. The Gold Standard may be a useful mechanism for realizing the Federal Reserve's determination to adopt monetary policies needed to sustain price stability."

So gold has its political uses. But they are subject to change. Especially when, as US Fed chairman Paul Volcker did in the years between those 1980 and 1984 manifestos, interest rates are raised sharply to beat back the inflation caused by elected government's deficit spending.