Information on the Gold Standard based upon surveys done during the 2016 elections.
This is the first time we asked about monetary policy in this election cycle. We asked if the dollar should be based on Gold’s weight. This is more commonly known as the Gold Standard. Party nominees have used currency manipulation as part of their argument against past trade agreements and how foreign competitors have screwed the American worker.
One type of monetary reform is tying the dollar or other currency to a commodity. Throughout history, Gold has traditionally been used as a backing currency. Much of the world was on a Gold standard before World War II. And, even after the World War II, the world was on a Dollar standard. The Dollar was connected to Gold until Richard Nixon removed the Gold Standard during his administration.
In May, 35% of Colorado Voters stated yes. Meanwhile, 28% disagreed. The rest had no opinion. Eight weeks later, 41% agreed the Dollar should be based on the Gold Standard. Whereas, 29% said no. Every major demographic group saw an uptick for their support for a Gold based dollar. But, there was a significant difference between political parties. In May, 45% of Republicans agreed the dollar should be based on gold/ Only 17% disagreed. Eight weeks later, 52% of Republicans supported tying Gold and the Dollar while only 18% opposed it. Twenty-two percent of Democrats in May and 26% of Democrats eight weeks later supported the concept of dollar based on gold. This contrasted with 40% of Democrats disagreeing in May and 43% disagreeing eight weeks later.
In Nevada, there were similar results. A plurality of voters supported the Gold Standard. Forty One point six percent of voters in May followed by 40.6% of voters eight weeks later supported the idea of the gold standard while only 26.5% of voters opposed this in May and 28% eight weeks later. Blacks were least likely to be supportive. Twenty-eight point four percent said yes in May. This was followed by 35.7% eight weeks later. Twenty Eight percent of Blacks oppose having a dollar supported by Gold in May followed by 33.8% eight weeks later.
While Blacks support for the gold standard increased, it is nearly even. Nevadan Hispanics were the strongest backers. Forty Seven point seven percent of Hispanics supported the Gold Standard in May and 50% eight weeks later. Whites support nearly mirrored the overall voter supporter. Forty two point two percent in May supported the Gold Standard vs. 40.4% in July. Only 26.4% opposed the Gold Standard in May and 28% in July.
Republicans, just as they were in Colorado, were more likely to support the Gold Standard as 51.4% and 48.8% of Republicans in the two surveys. Meanwhile 26.2% and 28.7% Democrats support the Gold standard. Just as in Colorado, Democrats did not like the idea of a Dollar supported by a weight of Gold compared to Independents where there was an average of 18% in favor of those who supported it.
The closet margin was in Wisconsin where the support for Gold standard was at 29.4%. Opposition to it was 28.5%. Twenty-seven point seven percent of blacks supported the Gold standard with 28.5% opposing. Whereas, 30.7% of white voters supported the Gold Standard vs. 27.4% opposing. Thirty-seven point three percent of Hispanics supported the Gold Standard and 36.5% of Hispanics did not. Just as in Nevada and Colorado, Wisconsin Republicans and Independents are more supportive of using the Gold Standard. Democrats, again, opposed the idea.
Ohio voters viewed the need for the dollar to be supported by a weight of Gold, by 39% to 24% with Republicans viewing the need to tie the dollar to Gold by a 47.5% to 16% margin. Independents also favored tying the dollar to Gold by a margin of 42% to 24%. Democrats opposed the idea by a 35.5% to 24% margin. Black Voters barely approved tying the dollar to Gold by 31% to 29%. Both White and Hispanic voters were more supportive by a 39% to 24% and 43% to 16.5%.
Voice Broadcasting’s post-election poll showed 37% of voters supported the dollar to be on the Gold Standard. Twenty-eight percent said now with the rest of unsure. Forty six percent of Republicans and 40% of Independents were supportive of weight of gold. Whereas, only 25% of Democrats supported this. Thirty-five percent of Democratic voters, 21% of Republicans and 27% of Independents oppose the idea. Thirty-seven percent of Whites, 32% of Black, 33% of Hispanic and 35% of Asians wanted the dollar backed by the weight of gold. Whereas 28% of Whites, 29% of blacks and Hispanics and 26% of Asians did not.
In a Cyngal national poll, 41% of voters favored a gold backed dollar and 30% opposed it. Forty-seven percent of Republicans, 41% of Independents and 35% of Democrats favored a Gold backed dollar. Whereas 24% of Republicans, 36% of Democrats and 36% of Independents opposed the idea. The rest were unsure. Forty-one percent of Whites, 44% of Blacks, 34% of Hispanics and 19% of Asians favored the Gold Standard. Whereas, 31% of Whites, 25% of Blacks, 42% of Hispanics and 53% of Asian opposed it.
Monetary policy does impact trade policy. Trump has made currency manipulation part of his attack on China. But, it could easily be argued that the Feds quantitative easing is also currency manipulation. The advantage of having currencies backed by commodities such as Gold make it more difficult to manipulate the currency. The Gold Standard does have its disadvantages like other currency ideas. It requires discipline upon government spending. Many nations have chosen to escape the standard for that very reason.
Conclusions on the Gold Standard
We are not recommending one particular monetary policy over another. But, stable money is a necessity for long term economic prosperity. Central Bankers are often encouraged to inflate currency. This allows governments to fund exhaustive spending program. It also aids in exports. Nor does long term inflation help the economy. Many businesses can’t plan ahead if they are not certain what their investments will be truly worth.
There hasn’t been a debate on monetary policy since the late 1890’s. Back then, William Jennings Bryant wowed the Democratic convention with stirring words that we shouldn’t crucify Americans on a “Cross of Gold.” Certainly no modern day politician has even brought up the Gold Standard. You have two generations of economists who have no experience with any monetary policy backed up by commodities.
Judy Shelton noted in a recent Wall Street Journal:
“Nevertheless, Mr. Trump’s emphasis on currency manipulation brings into focus the shortcomings of our present international monetary system—volatility, persistent imbalances, currency mismatches—which testify to its dysfunction. Indeed, today’s hodgepodge of exchange-rate mechanisms is routinely described as a “non-system. No wonder so many workers employed by U.S. companies that manufacture products requiring substantial capital investment—automobiles and tractors, computer and electronic equipment—have become disenchanted with the supposed long-term benefits of free trade.
It is one thing to lose sales to a foreign competitor whose product delivers the best quality for the money; it’s another to lose sales as a consequence of an unforeseen exchange-rate slide that distorts the comparative prices of competing goods…To brand trade skeptics as sore losers is to malign them unfairly. To resent being victimized by currency movements is not the same as being opposed to free trade, nor does it signal an eagerness to engage in protectionist retaliation. It’s simply an honest response to incongruity: We need to reconcile global monetary arrangements with global trade aspirations… As former Federal Reserve Chairman Paul Volcker has observed: “Trade flows are affected more by ten minutes of movement in the currency markets than by ten years of (even successful) negotiations.””
Ms. Shelton point is that monetary manipulation affects trade negatively. If Central bankers can’t maintain monetary stability, they are putting the benefit of free trade at risk.
Voters are willing to explore the Gold Standard. But, many voters have no opinion on this issue one way or the other. No more than 41% of overall voters view a dollar backed by Gold as a good thing. So unlike trade issues where voters have strong opinions along with Presidential candidates, most voters and politicians have no strong belief in what constitutes good monetary policy. However, a government that inflates their economy is hurting their citizens’ ability to succeed.