Monday, January 24, 2011
Nixon and Treasury closed gold window, not Burn's Fed
John Tamny of Forbes came out with a great review of The Secret Diary of Arthur Burns: 1969-1974 today. What makes Tamny great is that he is the only writer for Forbes that preaches Austrian economic policy from what I have seen. So what better perspective to review a diary of the Fed Chairman that presided over the complete cutting off of the gold standard? Besides a few shots at the intelligence of the various characters in Nixon's administration, nothing really stands out beside this ridiculous quote:
“I explained a proposal I had put up to Grayson and his Commission, namely, pick some number below 21/2% – say, 2%; inform business firms that they may, if their business judgment so indicates, raise prices up to that figure; that they could do so without prenotification, but that they would still need to report the price advance, that they would need to justify it on the grounds of cost increase; and that they could run the risk of a rollback if the justification did not stand up under analysis.”
Still, the diary shows that Burns actually fought to stop the complete abandonment of the gold standard after all. Could of fooled me.... Anyway, he correctly predicted it would lead to trade war between countries. It's like he anticipated a president using the State of the Union to promote "American competitiveness" against that awful country that supplies us with real tangible goods like clothing and cheap electronics in return for a continually devalued currency.
Speaking of the State of the Union, George Will's brilliant description of it as an instance when every president that gives it "tries to stroke every erogenous zone in the electorate" easily goes down as the most intelligent political commentary of the year thus far. We all know where Chris Matthews stands on the issue...