Some conservatives are showing evolution on the matter of monetary policy.
For example, Larry Kudlow recently admitted that, contrary to what he expected, Ben Bernanke's easing measures haven't created huge inflation or dollar debasement, and that he might actually be on the right track.
But others in the party continue to bang the hard money drum.
In a WSJ op-ed, New York Sun editor Seth Lipsky argues that Obama's and Bernanke's policies have debased the dollar, and that a proper reform of the Fed would involve having a single mandate, and a requirement to watch the price of gold.
The monetary crisis of the era abated in the 1980s under the combination of Chairman Paul Volcker's tight money and President Reagan's supply-side fiscal measures. Over time, value flowed back into the dollar, which had soared to a 265th of an ounce of gold on the day George W. Bush was sworn in as president in January 2001.
Yet by the time President Obama took the oath of office in January 2009, the wars in Afghanistan and Iraq and profligate spending by Congress had driven the value of the dollar down to less than a third of its worth when Mr. Bush was sworn in. Its value has been halved again under Mr. Obama, to less than a 1,600th of an ounce of gold.
It's true that gold has had a great run over the past several years, but here's the real question: who cares?
Is the average person who has to buy bread, milk, go to the doctor, and pay rent affected by the doubling of gold?
Other than gold traders and jewelery makers and the small slice of industry that uses gold for industrial purposes, the price of gold doesn't matter to anyone.
What matters to people is the cost of real stuff, and in recent years that's been pretty subdued.
Here's the year over year change in core CPI. The prices that matter to real people aren't accelerating at nearly the pace that they were not long ago.
The Fed has a mandate to watch employment and watch inflation, and on the latter things are just fine in the only measure that matters to real people (the Fed doesn't use CPI, but other inflation measures are similarly subdued).
This is not to say that the price of gold doesn't reflect actual underlying economic changes.
For example, gold tends to surge when there's volatility. And gold also does well when real interest rates are very low, although you don't need gold to tell you when either of these conditions are in place.
But for real people and policy makers whose job it is to care about real people, gold is irrelevant.
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