In his speech at the Conservative Political Action Conference (CPAC), U.S. President Donald J. Trump hinted at what he believed would truly make America great again:
“Global cooperation, dealing with other countries, getting along with other countries is good, it’s very important. But there is no such thing as a global anthem, a global currency or a global flag. This is the United States of America that I’m representing.”
Trump has consistently advocated and successfully implemented his nationalistic ideal of making America great again by focusing on strategies and policies designed to protect everything American – from jobs to business opportunities.
However the idea that the President does not recognize a global currency is surprising considering the United States Dollar is widely accepted as the global currency.
The Bretton Woods monetary system legally defined the U.S. Dollar as a global currency and convertible to gold at $35/oz. Even when President Nixon temporarily suspended the convertibility of the dollar into gold, it continued to be recognized as the world’s global currency.
The U.S. Dollar’s status as global currency has been identified by economists such as John D. Mueller, former chief economist of Rep. Jack Kemp, as the culprit in the United States’ trade balance problems:
“A monetary system based on a reserve currency is unsustainable since foreign official dollar reserves (for example) are acquired and must be repaid in goods. In other words, the increase in official dollar reserves equals the net exports of the rest of the world, which means it must also equal U.S. international payments deficits – an unsustainable situation.”
Thus, Trump may have realized that having the U.S. Dollar continue as the global currency could hinder negotiations for fair trade agreements and dampen stimulus to create more jobs in America.
An option that the Trump administration may consider would be to adopt a policy once advocated by then- Rep, Jack Kemp. That policy would be to adopt a modernized international gold standard.
Trump himself has been known to have quite an affinity for gold. In fact the President is very familiar about the country’s history with gold:
“We used to have a very, very solid country because it was based on a gold standard. But it would be tough to bring back because we don’t have the gold. Other places have the gold.”
Trump repeated his preference for having the gold standard back in another interview:
“Bringing back the gold standard would be very hard to do, but boy, would it be wonderful. We’d have a standard on which to base our money.”
The truth is, the United States has more gold than Germany and the International Monetary Fund (IMF) combined.
While the President may have been misinformed on the quantity of gold held by the United States, he was 100% on point when he said the United States was “very solid” when it was based on the gold standard.
With this precedent, should President Trump pursue gold as the global currency, the outcome for America could be summed up in one word: Prosperity.
Even former Federal Reserve Chairman Alan Greenspan shared President Trump’s advocacy of a gold standard:
“I view gold as the primary global currency. When I was Chair of the Federal Reserve I used to testify before US Congressman Ron Paul, who was a very strong advocate of gold. We had some interesting discussions. I told him that US monetary policy tried to follow signals that a gold standard would have created.”
Greenspan served under President Clinton in a period called the Great Moderation where over 20 million jobs were created.
Succeeding presidents George W. Bush and Barack Obama abandoned Greenspan’s monetary policies from the period of Great Moderation. As a result hardly any jobs were created under Bush while Obama’s contributions were modest at best.
If President Trump wants to make America great again, he should act on his idea and make gold the global currency.
America has the gold. All it needs is the policy.