US President Ronald Reagan (1911 – 2004) shakes hands with real estate developer Donald Trump in a reception line in the White House’s Blue Room, Washington DC. November 3, 1987. The reception was held for members of the Friends of Art and Preservation in Embassies Foundation. (Photo by White House Photo Office/PhotoQuest/Getty Images)
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When Ronald Reagan died on June 5, 2004, Robert Novak observed that Reagan fulfilled every single promise but one.
During his campaign for president in 1980, Reagan routinely told supporters that “No nation in history has survived fiat money, money that did not have precious metal backing.” Reagan wanted to return to the gold standard, and promised as much. Novak told viewers how very much Reagan regretted not fulfilling his dollar pledge.
Why didn’t Reagan do as he promised? It’s a question that rates asking when it’s remembered that he could have unilaterally defined the dollar in terms of a gold ounce. And no one could have stopped him.
How we know this can be found in the presidencies of Franklin Delano Roosevelt and Richard Nixon. In 1933, Roosevelt devalued the dollar from 1/20th of a gold ounce to 1/35th. He did the latter in the face of enormous amounts of criticism (with good reason), including from then Fed Chairman Eugene Meyer. So incensed was Meyer by FDR’s decision that he resigned over it, and subsequently bought the Washington Post to use as a vehicle for criticizing the U.S.’s inflationary president.
Arguably more important for the purposes of this write-up is that totally contrary to what we’re told by left and right about the Fed’s mandate to protect the value of the dollar, it has nothing of the sort. Meyer was powerless in his battle to protect the dollar from FDR’s caprice.
Fast forward to 1971, President Nixon decided to sever the dollar’s link to gold altogether. Milton Friedman and other prominent economists plainly thought the gold definition low rent, that it was better to let the dollar measure float in measureless fashion so that economists could take control of monetary policy. That we suffer the conceit of Friedman et al to this day is a waste of words, so obvious is it.
The main thing is that Nixon, for being president, was able to devalue the dollar. Fed Chairman Arthur Burns begged Nixon to not do what was so plainly inimical to the wellbeing of every American (we earn dollars, get it?), but as was the case with Meyer, he was powerless to do anything about it. That Burns is blamed for the 1970s inflation to this day is yet more evidence of the bankrupt nature of “economics.”
Still, from FDR and Nixon readers can hopefully see that presidents get the dollar they want. They can alter its value vis-à-vis gold (FDR), they can devalue it by exiting gold(Nixon), after which Reagan could have revived the dollar by re-linking it to a commodity like gold. Why didn’t he? The guess here is that the same economists who convinced Nixon to do as he did convinced Reagan to not reverse Nixon’s decision.
Which is where Donald Trump comes in. He’s the perfect president to fix Nixon’s monumental error, and not just because Trump would plainly revel in the inevitably moronic reactions from the PhD class for having had the temerity to – gasp – imbue the dollar with stability as a measure. Trump would rightly thrill in tweaking the PhDs, all the while being able to cheer his base with the truth that they would no longer need to fear having the dollars they earn be devalued by the federal government.
Even better, Trump could do what Reagan unfortunately did not. He would enjoy that too, with good reason. A stable dollar would lift the global economy like nothing else, and would give the Trump presidency infinitely more prestige than a Nobel Peace Prize ever could.