Kemp on Gold
Jude Wanniski
June 28, 2001


Polyconomics has been arguing since early 1997 that we are in the process of adjusting to a monetary deflation, one that has been characterized by a decline in the price of gold. On January 7 of this year, I met with Vice President Dick Cheney and advised him that the economy would not respond to interest-rate cuts or to tax cuts as long as the price of gold remained below $300. It was $265 when I met with Cheney and today is only a few dollars higher. The "mystery" on Wall Street of why the economy is still suffering, despite the rate cuts and tax cuts has been no mystery to me. I actually told Cheney that there is nothing he could do about the problem until the market analysts began seeing the "medicine" was treating a contraction, while different medicine was needed for the deflation. It seems a good time now to push for a national discussion about a return to gold, which is what Jack Kemp's piece in Thursday's Wall Street Journal aims to do.