Ron Paul, for whom returning to the gold standard has been a decades-long crusade, has said he would name Grant chairman of the U.S. Federal Reserve. In his case, that would be a compromise – Paul has often called for the Fed to be abolished altogether.
Meanwhile, Newt Gingrich has promised to appoint Jim Grant to head a commission to study the possibility of going back to the gold standard.
Grant, who publishes Grant’s Interest Rate Observer, is a well-known gold bug and critic of the Fed.
His ideas have attracted increasing favor in a party that blames the Fed’s easy money policy for the country’s economic problems.
Grant calls the current system of fiat currency an “anachronism” and questioned the “command and control, top-down system of having a handful of people at the Fed dictate interest rates.”
He’s worried that the Fed’s quantitative easing policies have created a bubble in Treasury bonds.
And make no mistake: If a Republican president gives him the opportunity, Grant already has a plan, starting with making a public case for the gold standard.
Grant said he believes a dollar should be fixed “like a foot, or a pound.”
Such a policy would arrest the steep decline in value the dollar has suffered since the United States abandoned the gold standard in 1971 – a point Paul often raises on the campaign trail.
“Since 1971, since we lost our link to gold, the dollar has lost 85%,” Paul recently told NPR. “So if you were a saver and wanted to take care of your kid’s education, even if you made a little interest, you’re going to lose money.” [Related: Powershares Dollar Bullish ETF (NYSEArca:UUP), Powershares Bearish ETF (NYSEArca:UDN)]
Middle-class worries like that have helped make a return to the gold standard a major issue in the 2012 Republican primary battle.
The other two remaining GOP contenders, Mitt Romney and Rick Santorum, are believed to be against a return to the gold standard, though both refrain from talking about it.
Of course, Republican proponents of the gold standard may not need Paul or Gingrich to win the nomination to move the issue forward.
For example, most analysts expect Paul to stay in the primary race to the end to collect as many delegates as possible for the Republican National Convention in August. The assumption is that Paul will try to use his support to get some of his core issues, such as the gold standard, into the official Republican platform.
And depending on how well Gingrich fares in the remaining primaries, he and Paul could join forces to push the adoption of a gold standard plank. [Related: iShares Gold Trust (NYSEArca:IAU), ETFS Physical Swiss Gold Shares (NYSEArca:SGOL), SPDR Gold Trust (NYSEArca:GLD)]
Support for a gold standard could also come from unlikely quarters. As the nominee, Romney could well consider adopting some of his opponents’ most popular positions in an effort to unite the party behind him.
Regardless of what happens in the Republican presidential race, the notion of going back to the gold standard is not going away. The issue has gained significant traction among the general public.
A Rasmussen poll last fall found 44% of likely voters favored a return to the gold standard, with just 28% against it. The number in favor rose to 57% when asked: “Do you favor or oppose returning to a gold standard if you knew it would reduce the power of bankers and political leaders to steer the economy?”
As for Jim Grant, he’s “sitting by his phone,” ready to fight for the gold standard if given the chance.
“I think it’s high time that someone in American politics raised the question and helped us form the debate about fundamental monetary change,” Grant told NPR, making the classic argument that gold is the original form of money. “Gold is sort of the Muhammad Ali of monetary substances; the world over, you look at it, you know what it is.”
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