Memo To: Fed Chairman Alan Greenspan
From: Jude Wanniski
Re: Our Floating Unit of Account
Do you remember, Alan, where you were when you learned President Richard Nixon took the United States off the gold standard, Sunday, August 15, 1971? I remember listening to a radio announcement at a backyard family picnic in Schuylkill Haven, Pa., at about 6:30 p.m. At the time, I had no idea what it meant, or whether it was a good thing or a bad thing. You know, in all the years we've known each other, I never thought to ask you what you thought when you heard about his decision. If anything, I'd think you were worried that it was not a good move, given the fact you have been a lifelong advocate of a gold standard. You were still at Townsend-Greenspan, though, so there was no public record of your views. You may not have noticed this week's issue of Barron's, so I send along a link to the commentary I wrote for it, remembering a "Day of Infamy: Learning the lessons of the fateful decision to close the gold window." I expect that even now you know how difficult it is living with a floating unit of account. How much easier life would be for everyone on earth if you and your fellow Fed governors relinquished the power you have to manage the dollar's value and gave it back to the marketplace, with gold the paper dollar's link to reality. I see you still deny we are in a monetary deflation, but I think you know we are. Global capitalism cannot work with a floating unit of account -- a price determined by the collective wisdom or whim of the twelve men and women of your Federal Open Market Committee.