I want to talk about the stupidity of the gold standard. But before I get to that, I think we should take a moment to be pleased that Mount McKinley will now be called by its previous name, Denali. It is the tallest mountain in North America. The Koyukon people have been living in the area for centuries — long before William McKinley was even a glint in the eye of William Sr. They called the mountain Denali — or as close as you can get to it when you aren’t speaking one of the Athabaskan languages. The fact that we are going back to the old name is a very good and honorable thing.
But Matt Yglesias is the kind of guy who isn’t above kicking a guy when he’s down, President McKinley’s Policies Were Garbage, and He Doesn’t Deserve an Awesome Mountain. As usual, Yglesias is totally right. While it is true that McKinley was president during a rip-roaring recovering at the end of the 19th century, it is also true that it was just dumb luck. He’s kind of like the Ronald Reagan of his day: he got all the credit for a change in the money supply that he had nothing to do with.
Now in the case of Reagan, we weren’t on the gold standard. So it was Paul Volcker who basically destroyed Carter’s presidency and then created Reagan’s “Morning in America.” (Note: Volcker was and still is a Democrat; can you imagine a Republican sabotaging his own party like that? And don’t say Greenspan because it doesn’t work at all!) But in McKinley’s time we were very much on the gold standard. And what happened at that time ought to make all the gold bugs out there rethink their ridiculous notions of money. But of course, they won’t.
Remember William Jennings Bryan “Cross of Gold” speech? If you are like most Americans, you don’t understand a damned thing he was talking about. And all the stuff about “free silver” is the same thing. People advocating for it wanted a greater supply of money in the economy. They wanted inflation. I know that the power elite have done a great job of vilifying inflation in this country, but as I write about all the time, modest inflation is a good thing. It drives the economy forward; it creates jobs; it alleviates debt. But on the other hand, for the rich, it’s a bad thing — primarily because more demand for labor means more money has to be paid for it, and because lenders want to squeeze every drop of blood out of borrowers that they can.
So allowing currency to be based on gold and silver would have been a good way to achieve some inflation and provide farmers and workers with some relief. But McKinley — like most representatives of the power elite — did not want to provide the working man with relief; he wanted the rich to keep on getting richer. So he was strongly behind the gold standard. But a funny thing happened during his presidency: there was a huge increase in the output of gold in the world. As a result, the value of gold went down, causing the inflation that the “free silver” movement wanted. McKinley got the credit, but he shouldn’t have. In fact, if he had gone with the “free silver” movement, the depression would have ended much earlier.
A couple of years ago, I wrote, Gold Is Not a Good Investment — at Least for 500 Years. The truth is that the value of gold has only gone down over time. What’s more, its value is highly volatile. The gold bugs are always on about how the Federal Reserve is “printing money” and causing inflation. As I said, that would actually be a good thing. But the truth is that since we left the gold standard, the economy and prices themselves have been far more stable than they were when we were on the gold standard. So I don’t even know what these people are on about — except that they are totally irrational and immune to reason.
But it is very cool that Denali in the highest mountain in North America. In addition to it being the right thing to do, it is one less occasion when we even need to think of President McKinley.