Gold: The Once and Future Money

Lewis, an investment strategist, argued for a return to a gold-based monetary system, presenting both a historical case and a practical proposal.

His historical argument reads monetary history as a contrast between periods of stable currency value and periods of instability. He covers the classical gold standard from roughly 1870 to 1914, which he presents as a period of price stability and international integration; the interwar breakdown; Bretton Woods; and the period after 1971, which he characterises as one of monetary instability producing inflation, currency crises and misallocation. He interprets particular episodes, including the American 1970s inflation, the Japanese asset bubble and various emerging market crises, as consequences of currencies without a stable anchor.

His conceptual argument is that a currency should be a stable unit of measurement rather than a policy instrument. He argues that the value of money should be fixed against something outside the control of the monetary authority, that gold's stability as a store of value derives from its supply characteristics, and that a modern gold standard would not require gold coinage or full reserve backing but only a commitment by the monetary authority to buy and sell gold at a fixed price and to conduct open market operations to maintain it.

He also argues that supply-side tax policy and stable money together are what produce growth, which connects his position to the supply-side economics tradition.

The book argues one position throughout. The mainstream economic assessment is that the classical gold standard's stability is overstated, that it produced repeated deflations and banking panics, that it required political tolerance for deflation that no longer exists, and that gold standard constraints deepened the Depression. Lewis does not engage these arguments substantially. Bernstein's The Power of Gold, also in this reference, presents the historical record without the advocacy.