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Ryan, Rand, and gold

David Glasner has fallen into Krugman’s Bog, a poorly mapped but vast region of the Internet where the choler is so thick one cannot slog through it. David’s post is called “Where Does Paul Ryan Go When He Thinks About Monetary Policy?” The answer, he thinks, is Ayn Rand, and in particular a passage from The Fountainhead [correction: Atlas Shrugged, as a commenter pointed out; my mistake] where the character Francisco d’Anconia makes a speech about the merits of gold as a monetary standard. As Ryan has said, he read Rand when he was young and, like many of her readers of that age, was heavily influenced by parts of her message. (He explicitly rejects other parts.) However, David cites no direct evidence that Ryan shares d’Anconia’s views (which are pretty clearly Rand’s) on gold. Instead, David cites another blogger whose views are pure speculation.

Here is a rope that travelers who have fallen into Krugman’s Bog can use to pull themselves back onto the High Road of Informed Commentary. Thomas, the legislative tracking service of the Library of Congress, shows what bills a member of Congress has sponsored. In my search, I found that Ryan sponsored two bills on monetary policy: the Price Stability Act of 2008, which would have required the Federal Reserve to establish an explicit numerical definition of “price stability” and to maintain a monetary policy that effectively promote it; and the International Monetary Stability Act of 2000 (also 2001), which would under certain conditions have allowed the sharing of seigniorage with countries that used the U.S. dollar as their official currency. Neither bill passed–the fate of most proposed legislation. My reading of the Price Stability Act is that it would in principle permit nominal GDP targeting (David’s favored approach) if the Federal Reserve defined “price stability” in a way compatible with that approach. I did not find that Ryan sponsored bills to re-establish any type of gold standard, though if others do, let me know in the comment section.

I have had some small acquaintance with Ryan. More than a decade ago, I was a staff economist on the Joint Economic Committee of the U.S. Congress, of which Ryan was one of the members. I worked with his staff on the International Monetary Stability Act, which was sponsored in the Senate by my boss at the time, Connie Mack III (father of the current Republican candidate for Senate from Florida). The few times that I briefly met Ryan, he impressed me as having a combination of intellect and energy that is rare in Congress. Though I have not met him since, I have followed his career and have been confirmed in my impression of long ago. On financial issues, broadly construed, Barney Frank has been over the last decade the only other member of the House of Representatives in the same league in terms of providing intellectual and legislative leadership, though of course Ryan and Frank are poles apart on most policies. I could offer you criticisms of both — after all, nobody except me does exactly what I would do as a member of Congress — but I would start from their legislative records, not from what some other blogger thinks about them.

[ADDENDUM: See David Glasner's reply in the comments. I was mistaken to say that there's no direct evidence that Ryan shares d'Anconia's views. In the post David cites, Ryan does say that he goes back to d'Anconia's speech when he thinks about monetary policy. I should have been more accurate and written that there is no readily apparent connection between the speech, with its emphasis on gold, and the legislation on monetary topics that Ryan has sponsored. Thank you for the correction, David.]

  • Kurt, I think you meant _Atlas Shrugged_ rather than _The Fountainhead_?

    Rand's view on monetary policy would be, of course, to immediately repeal the legal tender laws that force creditors to accept paper dollars, repeal the capital "gains" tax on gold and silver, and repeal the laws that grant to the Federal Reserve its powers to be the central planner of money and credit.

    She believed (as I believe) that the market would select gold, if given half a choice.

    While Paul Ryan may have been influenced in some ways by Ayn Rand, he is definitely no Randian.

  • I have to admit to having a hard time finding where anyone attached Ryan's thinking to a gold standard or to any special relationship with gold, except rather obscurely in Ryan's own speech citing the Taggart wedding interplay.
    Maybe I missed it.
    But to cite Ryan's meager monetary policy efforts as relating to maintaining the purchasing power of the currency rather than repeal of Humphrey-Hawkins full-employment Bill is rather myopic.
    Suffice to say that inflation, or general price-stability, was well in hand at the time of the crash.
    Meanwhile, the purchasing power of the people, the nation and the global economy went down the drain, and has remained there while the relative value of the currency has remained little changed.
    So, except for getting the central bank out of the task of promoting fuller employment for all Americans, I'm not sure what Ryan's monetary policy ideas are all about.

  • Kurt, In my post I quoted Ryan's speech to the Atlas Society in which he explicitly said that when he thinks about monetary policy he goes to d'Anconia's speech. I didn't rely on another blogger for that, it's a direct quote from his speech to the Atlas Society on the Atlas Society website. I do agree with you that Ryan should not be judged solely on the basis of a single speech.

  • Ed Thompson

    Paul Ryan—any non-Objectivist—does not "get" it. Objectivism holds that there should be NO monetary policy, i.e., Objectivism advocated laissez-faire capitalism or complete separation of state and economics, including money. The Atlas Shrugged money speech does not cover that point. Ryan is correct in that under laissez-faire gold would be money, but how do we get there? For a brief outline of laissez-faire, see

    • I also want no statutory monetary policy, but I don't expect gold (or bank notes promising gold) ultimately to be the dominant form of money in a sufficiently free market. Historically, the North American dollar standard was a silver standard, then a bimetallic standard in the U.S. followed by an exclusive gold standard by statutory fiat. The silver standard was more a consequence of laissez faire than the later gold standard.

      But I don't expect a silver standard to predominate in a sufficiently free market ultimately either, and I don't think much of various theories of which money must ultimately predominate. These theories only encourage statists. "Well," these statists say, "gold will be money in a free market anyway, so if the state substitutes gold for its current fiat money, to hasten the transition, no harm is done."

      This apology for a statutory gold standard is nonsense. A statutory gold standard is still fiat money. It still circulates by the force of a state demanding it in taxes and then spending the tax revenue, as well as selling entitlement to the tax revenue.

      • MichaelM

        This is a wonderful post because it makes a point that is not made often enough: The 'Gold Standard' was as much a state intervention on the money market as modern paper and digital currencies are.

  • Ed Thompson

    Paul Ryan—any non-Objectivist—does not "get" it. Objectivism holds that there should be NO monetary policy, i.e., Objectivism advocated laissez-faire capitalism or complete separation of state and economics, including money. The Atlas Shrugged money speech does not cover that point. Ryan is correct in that under laissez-faire gold would be money, but how do we get there? For a brief outline of laissez-faire, see

  • Paul Marks

    Paul Ryan's record is mainly about fiscal (not monetary) policy. He is a moderate (interested in slowing the rate of growh of government spending – not cuttting it).

    If one takes a very rosy view of future economic prospects (I take a very different – and much more gloomy, view) then Paul Ryan's fiscal plans MIGHT be enough to avoid bankruptcy. Sadly the economy is likely to fall off a cliff next year (2013). So Paul Ryan's budget plans are unlikely to be anything like enough to avoid de facto bankruptcy.

    As for monetary policy….

    Of course government should not expand credit money.

    But not should anyone else.

    If someone want to lend out money they should first have the money to lend.

    "Extending credit" is fine if it means letting people have goods in the hope of future payment (as long as one actually owns the goods), but not if it means lending out "money" that does not, in fact, exist.

    Boom-busts occured long before the creation of the Federal Reserve in 1913 – and were caused by people (bankers) lending "money" that did not exist (the extention of credit IS the "boom") and the BUST is ineitable. However, Central Banking (such as the Federal Reserve) makes these boom-busts vastly bigger than they otherwise would be.

    Should gold be money?

    If buyers and sellers agree to that in private contracts.

    But they may prefer silver – or some other commodity.

  • Larry White

    See Ryan's speech at the Dec. 2010 Atlas / Freedomworks Sound Money Forum: