Matt’s Marvelous Mailbag seeks to provide marginally adequate answers to much better questions about politics, economics, social life, theology, or any potpourri you see fit to have answered. Send questions to mailbag.bereans@gmail.com.  

Yah, let’s do a music recommendation this week. Verklarte Nächt by Schoenberg. Fair warning, it may not be your cup ‘o tea, but it is a beautifully complex piece.

Q: Sam asks: “What would a path back to the gold standard look like for the U.S.A.?”

A: Well, the cynic within me wants to say that it doesn’t look like anything at all because it probably won’t happen, but maybe that’s too pessimistic. A more nuanced way to answer would be: it will likely never happen as long as the government maintains a monopoly on the money supply. I’ll try to explain and will let the eminent Dr. Haymond correct my reasoning as he sees fit.

Governments, as you may have gathered, tend to rack up debts; such is the nature of their existence. Sooner or later, the governments have to make good on those debts, lest they lose credibility and see people cease their debt-buying activities. Well, if I’m Mr. Bob McGoverns-A-Lot, I’ve got a couple of options in front of me. I can raise taxes, but that’s some risky political business right there, especially if I’m in a swing district. So maybe we hold off on taxes for now. I can always sell government bonds, but that’s a short term solution anyway, and I’m just gonna make the problem worse if interest rates are high. Oh, but looky here…I’ve got control of the printing press. Maybe, while I’m oh-so-innocently wandering around, I just accidentally nudge the lever up to fast, and we crank out some more dollar bills. Yah, we’ll get inflation, but that’s not my problem. I paid my debts off.

I’ll let Henry Hazlitt be the pessimist here; read what he said about getting back to a gold standard once you abandon it (From CATO): “As Hazlitt points out, it is only after hyperinflation is well under way that the public will even contemplate incurring the substantial costs of completely abandoning the existing medium of exchange in current transactions as well as credit transactions. In short, inflation will have to progress a long way before the parallel gold standard, as conceived in Hazlitt’s plan, presents serious competition to the government fiat money. In the meanwhile, the economy will still be left to suffer the ravages of a hyperinflation.”

So CATO thinks the outlook is bleak. Fair enough, but I’m young and naive, so I’ll try to maintain my optimism that cooler heads may prevail in some capacity. It’s possible that a policy like NGDP targeting (read Selgin on this) could be a nice intermediate step to at least bind the government’s hands somewhat on inflation and impose a sense of monetary discipline. But, to the pessimist’s point, that turns the burden back to fiscal discipline, which is just not popular these days. Cato has a nice primer on steps back to a gold standard if you care to read further. Until then, you can ponder ways to change the human heart, but I think we already know the problem and solution there.

Q: Sam also asks: “As I recently read an article about the U.S. treasury considering offering 100 year term bonds, I occurred to me that I know very little about treasury bonds. Could you please explain the what and why of treasury bonds. Do they normally beat the rate of inflation? Would a 100 year bond stand a chance against inflation?”

A: Someone’s got the monetary bug, I see. Ah well, there are far worse conditions to be had. Remember in the previous question when I was talking about Bob McGoverns-A-Lot? Well, he needs to pay his debts, but he also has to finance his day-to-day expenditures as well, and one of the ways he does that is by selling government bonds (Treasury bonds or “T-bonds” are a common form). There are different permutations, but Treasury bonds in particular have a maturity date of at least 10 years, a face value (how much you pay upfront), and a coupon payment that comes in semiannual installments. The buyer receives those payments until the maturity date, at which point the original face value is paid back in full.

Generally government bonds are popular because they are “risk-free,” which is a little misleading but stems from their government backing. How does the government ensure those will be paid? Well, now we’re sort of back to parts of the first question. The government can raise revenue or inflate the currency. “Well, Matt, it seems like without any fiscal discipline, there’s an awful risk of the government choosing to inflate the currency.” Very good, young Padawan…now you begin to see the point.

So do T-bonds outpace inflation? Well, that depends on the interest rate you get and what inflation is. Right now, interest rates tend to be pretty low, but inflation hasn’t been too wild either last I checked. Now, as to the 100-year T-bonds, this is somewhat of an extraordinary take. The WSJ came out in favor of using 100-year T-bonds as a financing tool right now since interest rates are so low, but I’ll have to ponder that some more before I make a call.

Q: Daniel asks: “Many are calling for Steve King to be removed from office. Is this the proper action to take or is it the right course to let the voters from his district be the ones to decide to remove him or not? Of course his words are disgusting, but I think it would be a dangerous precedent to suggest removing people for non-criminal offenses like words they speak. Many Republicans, including the President, have spoken out against those comments, and many have already expressed support for his primary challenger. 

A: One of the great political befuddlements to me is why Republicans bungle their comments about abortion so often.  King’s comments are disgusting, but they’re also utterly ridiculous and unnecessary.  I mean just listen to this:

“What if we went back through all the family trees and just pulled out anyone who was a product of rape or incest? Would there be any population of the world left if we did that?” – Steve King

Why? Why on earth would you make that the crux of your argument? And this knucklehead went out later to double down on the comments. If you’re against abortion, your talking points should be very simple.  This is a human life; we’re protecting a human life.  There’s no need for novelty here; keep it simple and straightforward.  But for some nebulous reason, there have been numerous Republicans who have thrown away their political careers by making bone-headed comments similar to what King said.  Let us also recall Richard Murdoch, who threw away a winnable Indiana Senate seat in 2012, and Todd Akin, who did the same thing in Missouri.  You’ve got to choose your words more carefully.  We don’t need asininity of this sort. 

So, should he be removed?  That’s a question for the House to decide right now.  We should note that the Republicans have already ostracized King for earlier comments and stripped him of his committee assignments, so kudos to them for that.  Personally, I agree that we don’t want to throw people out of Congress just for their words as it seems to set a dangerous precedent.  I tend to be fairly libertarian on free speech; you can generally say what you want so long as you’re willing to pay the political or social price for saying it.

All that being said, I do hope King is unseated come next election.  The party would be better for it.

Q: Daniel also asks: “Thoughts on Andrew Luck retirement? Will Dr Smith (a Colts fan) recover?”

A: Well, it certainly took me by surprise. I’m more interested in seeing how everyone who had drafted him for their fantasy team responds now; I hear Case Keenum got the starting job for the Redskins, so there’s always that option. As for Dr. Smith, I’m sure he’ll be appropriately resilient. He’s borne a great many tragedies and heartaches being a Georgia fan (I’m sure that flag has dried his tears many times), so he’ll bounce back from this.

Q: Nathan asks: “What is your reaction to the recent appeals court ruling (involving a faithless elector in Colorado) that electors can vote freely and cannot be bound by State law in how they vote?”

A: Lest I intrude too much on Dr. Smith’s territory, I’ll simply say that regardless of how this turns out, I’d be surprised if this majorly affects the future of our elections for two reasons.

1. The main precedent I found is Ray v. Blair, in which the Court held that states can require loyalty pledges from electors. Technically, the issue of breaking that pledge wasn’t fully considered, but suffice it to say I’d be surprised if the Court lets this fly.
2. Electors are, not always, but very generally committed to voting for their party’s candidate anyway. Even in the last election there were just a handful of faithless electors (even from states that don’t require loyalty pledges), so unless the election was exceptionally close, I’d be surprised if there were enough faithless electors to swing an election.

Just on a quick political analysis aside, people will be tempted to read this ruling as, “Oh good, now we can stop another Trump from coming in.” Well, sorry to remind you of this, but Clinton actually had more faithless electors than Trump did. I refer back to point #2. Electors most generally bleed the party colors; that’s why they’re the electors. Ultimately, my gut tells me that this doesn’t drastically change much.

A Final Reflection:

An interesting point was brought to my attention today regarding Christ’s anguish on the cross. We would say that he never stopped trusting in the Father, yet we have that image of him on the cross crying out, “My God, my God, why have you forsaken me?”* So, class, did Christ stop trusting the Father? I’d say no. I’d also say that should make us think twice about what “trusting God” can look like. Sometimes it’s as simple as choosing, among all the other options we have, to keep crying out to Him in the midst of despair. I’d posit that it’s far less about how well you’re running the race at any one point in time and far more about which way you’re going, however slow it may be. Just my thoughts. How about yours?

*Side note: some commentaries have noted that Christ switches from using the affectionate term “Father,” which he most often used, to a common call of humanity, “My God.” We may never know the depth of what Christ went through, but he certainly felt the full weight of humanity’s plight in that moment.