Some time ago, Rep. Paul Curtman’s (R-105) gold currency measure, HB1637, caught my eye – partly because it was so patently ridiculous. I had started to write about it and the role that gold has played in the more paranoid wingnut fantasies over the past decades (there are folks who read the Wizard of Oz as an allegory about the gold standard), but decided that I would put it on hold, and if we were really lucky, Curtman’s promenade on the cazy side would be brought to a halt by more seasoned hands in the legislature.
Turns out, there are no such seasoned hands – in the Missouri House, that is, which has just voted to send Curtman’s fantasy opus to the Senate. In the – I hope – unlikely event that this bill makes it through the Senate, Missouri will join Utah in recognizing gold and silver coins issued by federal mints as legal tender.
On the surface it just sounds goofy. Only a fool would really try to use gold and silver to make purchases. Think about it – would you be willing to trade a gold coin with a commodity value of $1200 for the $50 dollars of groceries it’s face value would get you?
Curtman, however, was inspired by a development in Utah. An enterprising soul there has offered to hold gold in a depository and issue a debit card that can be used to spend down the actual, commodity value of the gold credited to the debit card holder. As Curtman conceded:
The provisions of the bill won’t be utilized unless and until a business like the one in Utah is developed in Missouri. Curtman says, “Right now it’s a new concept and so there’s not really regulatory authority over it, so that’s one of the parts of the bill … if this happens, the Secretary of State’s Office would be the one to handle it, because it’s commodities exchange.”
So what does Curtman hope to achieve? Would you believe he sees this as an important hedge against inflation? Although inflation is currently a non-issue, this rationale is telling. As Ed Kilgore observes:
The idea that hyperinflation is the major economic peril facing America at the moment requires a truly special perspective on current events. But throughout history, “hard money” advocates have conflated currency with morality, and more generally, creditors with virtue. That makes latter-day goldbugs nothing more or less than the outer edge of a conservative movement increasingly inclined to define the defense of “haves against have-nots” as the defense of civilization under seige by redistributionist barbarians.
Anti-redistributionist frenzy aside, hard currency has been a cause célèbre among the paranoid right for generations. U.S. currency was decoupled from gold in 1971, but the desire to return to the good old, hard currency days is near and dear to the right wing heart for the very reasons that most economists eschew it. Delinking gold from the currency allows policy makers greater flexibility to respond to changing economic conditions. Fanatic free-market advocates, however, distrust this flexibility and prefer to leave the value of the currency to the vagaries of the market. As The Economist mockingly observes, “the quintessential gold bug is an investor who expects every form of paper wealth to collapse, along with civilisation itself.”
It gets even nuttier, however. The way many conspiracy theorists spin it, paper money is part of a plot to create an economic collapse:
According to this theory – and it has many forms – an elite will usher in an age of hyper-inflation in order to improvise [sic] citizens in the developed world. Having achieved this they be in possession of the only real assets (property, gold) and thus have even greater political power.
A final irony: If you know anything about Curtman, you of course remember that he is very fond of representing himself as a fearless defender of the Constitution. Consequently, a particularly amusing aspect of Curtman’s efforts to establish an alternative currency is that it arguably contravenes Article One, Section 8 of the U.S. Constitution. To be fair, hard currency enthusiasts respond that Article One, Section 10 suggests that states may recognize gold and/or silver currency – an argument that, it has been pointed out, hinges on ignoring the purpose of Section 10 and its limitations. Constitutional considerations aside, the Economist is probably correct that for folks like Curtman, the real attraction of gold depends on “airier considerations, such as whether you think Barack Obama is the Anti-Christ.”