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Has Paper Currency Failed America?

Friday, 31 Aug 2012 | 5:51 PM ET

Across the centuries gold has been the currency of captains and kings, and if the GOP has its way, it could again be the standard for the US dollar.

At the Republican National Convention, the platform committee called on Congress to establish a "gold commission" which would examine whether or not to restore the country to the gold standard.

Has Paper Currency Failed America?
Lew Lehrman, author of "True Gold Standard" believes that America's 40 year experiment with a fiat currency has been an abject failure and if the nation is to thrive, we must get back on the gold standard immediately.

Lew Lehrman, author of “True Gold Standard” believes that in order to preserve America’s economic prosperity, it’s not an issue of if – but when.

Lehrman, who was a part of the Gold Commission created by former president Ronald Reagan in 1981, told Larry Kudlow that the nation has had plenty of time to experiment with fiat currency, and the experiment has failed.

“The Federal Reserve has had 100 years to test these academic theories about manipulating paper currencies – and all we’ve had are booms and busts.” he said on the Kudlow Report.

A return to the gold standard would keep the money supply constant, and according to Lehrman, generate stability.

Lehrman argued a stable money supply was what Congress always intended when it chartered the Federal Reserve, in the early 20th century. “When Carter Glass helped to establish the Federal Reserve in 1913, he designed it for the gold standard. It was created to preserve an enduring gold dollar.”


Advocates such as Lehrman believe a return to the gold standard would generate prosperity by bringing the debt under control. It would prevent the Fed from increasing money supply to stimulate the economy. Opponents argue that it would curb growth and take away a powerful tool to stimulate the economy when it’s sluggish..

The US dropped the gold standard in 1971, under Richard Nixon.

What do you think? We want to know!

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* It’s worth noting, the newly proposed gold commission would have no power except to make recommendations.



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  • Lawrence Kudlow is a CNBC senior contributor. Previously, Kudlow was anchor of CNBC's prime-time program "The Kudlow Report"