Floyd Norris writes for the New York Times that it's 1980 all over again.

Discussion of gold has gone from nonexistent a decade ago to the question of whether its price is in bubble territory, and now a policy question in the Republican primary. Ron Paul has been stumping for a return to the gold standard for decades, and the populace has finally caught up.

The issue resonates with young people who worry about a dire future with a dollar crash and nationwide poverty. The gold issue is hot enough that Newt Gingrich has promised to appoint a gold commission, with The Case for Gold coauthor Lewis Lehrman and Jim Grant as cochairman.

When Ronald Reagan went through the gold commission charade in 1981 to satisfy a campaign promise of studying the gold standard question, Lehrman cast one of two dissenting votes on the commission that voted in favor of maintaining the fiat money status quo. The other "no" vote came from Ron Paul himself. As Murray Rothbard explained,

The gold standard was the easiest pledge to dispose of. President Reagan appointed an allegedly impartial gold commission to study the problem — a commission overwhelmingly packed with lifelong opponents of gold. The commission presented its predictable report, and gold was quickly interred.

In similar fashion, Norris and the NYT look to explore the worthiness of a gold standard by citing a University of Chicago survey of 37 economists asking if they agreed that "price-stability and employment outcomes would be better for the average American" if the dollar's value were tied to gold.

Norris makes a point that among the 37 were advisers to both Democratic and Republican presidents. As if this insured some sort of impartiality. Like Captain Renault in Casablanca, you will be shocked — shocked! — to know that all 37 of the esteemed economists polled think a gold standard is a terrible idea.

The first statement the 37 economists responded to was

If the US replaced its discretionary monetary policy regime with a gold standard, defining a "dollar" as a specific number of ounces of gold, the price-stability and employment outcomes would be better for the average American.

Those disagreeing were 43 percent and those strongly disagreeing were the other 57 percent.

With their answers, the responders also provided a one to ten degree of confidence in their opinion. Most were highly confident in their positions. The Ivy League is well represented with nearly half the panel coming from Yale, Harvard, or Princeton. Berkeley and Stanford combined for ten on the panel and the supposedly free-market Chicago had five representatives, as did MIT.

Anil K. Kashyap is a professor of economics and finance at Chicago and used the survey to make this snide remark: "A gold standard regime would be a disaster for any large advanced economy. Love of the G.S. implies macroeconomic illiteracy."

According to his webpage Professor Kashyap is currently teaching these two advanced MBA elective classes: "Analyzing Financial Crises" and "Understanding Central Banks." But Kashyap is plenty busy off campus. He's a consultant for the Federal Reserve Bank of Chicago and a member of the Economic Advisory Panel of the Federal Reserve Bank of New York. He does work for the government of Japan and, well, you get the idea.

Former Obama economic advisor Austan Goolsbee, also a professor at Chicago, seems downright annoyed by the gold questions, saying, "eesh. Has it come to this?"

One wonders how MIT's Bengt Holmstöm makes this judgment: "All insights from the past and current crises go against a gold standard."

To the contrary, history shows that with a gold standard there are fewer crises; and when there are crises they are short-lived, as in the case of the panics of 1819, 1873, and 1920. Since the last remnants of the gold standard were cast aside by Nixon in 1971, world economies have been a series of booms, busts, inflations, economic instability, with no real economic growth.

"This proposal makes no sense in the modern world," says Yale's William Nordhaus. "Just look at the Eurozone to see the consequences." Surely the good professor doesn't think Europe is currently on the gold standard. But assuming he equates the fiat euro with a gold-backed euro, Professor Nordhaus should read Philipp Bagus's The Tragedy of the Euro. Bagus points out that member states of the European Union run deficits expecting them to be financed by the ECB. So Europe has a tragedy of the commons at work with its monetary policy that sets up very dangerous incentives for member states, making the system unworkable.

Governments cannot print prosperity, and capital must be saved — it cannot be conjured from the ether.

A number of professors on the panel made comments to the effect that the price of gold is too volatile or unstable to back the dollar. Evidently it doesn't occur to them that it's not the price of gold that's volatile but the value of the dollar. The value of the dollar is volatile downward for the very reason that the Fed can create dollars from nowhere; evidenced by the M2 money supply increasing from $683.7 billion in August 1971 to the current $9,712.8 billion.

Creating paper and digits is cheap and effortless. Mining gold is anything but. It's expensive and the yellow metal is quite hard to find. Grant's Interest Rate Observer points out that, according to the US Geological Survey, the world supply of gold has increased at rate of only 1.7 percent a year from 1900 through 2009.

Granted, it hasn't been a steady 1.7 percent growth. Production boomed in the 1930s, for instance, but since the 2000s, growth has declined to 1.1 percent. However, as Grant points out,

Still, over the long run, the co-commissioners [Grant and Lehrman] agree, the Newmonts and the Barricks of the world are more dependable sources of monetary matter than the Federal Reserves of the world.

Behavioral economist Richard Thaler asks, "Why tie to gold? Why not 1982 Bordeaux?" Assuming Professor Thaler is being serious, wine doesn't make a terribly good money, although it might do better than our present paper system. After all, a number of things have been used as money throughout history: salt, sugar, cattle, iron hoes, tea, cowrie shells, and even cigarettes in prison camps.

Ultimately the commodity that is selected by the marketplace to be money will have these characteristics: generally marketable, divisible, high value per unit weight, fairly stable value, durable, recognizable, and homogeneous.

Thaler's 1982 Bordeaux flunks most of the test. While it's divisible, wine is anything but durable, certainly not homogeneous, and hauling Bordeaux around by the bottle or barrel would not be handy in this (as the professors like to say) modern world.

It's hard to make a case that 1982 Bordeaux is generally marketable, but having a bottle to trade with might serve you well in certain situations. Value would vary widely due to weather and harvests on the supply side and consumer preference on the demand side. This leads us to the problem that, in some parts of the world and for some people, wine — whether it's 1982 Bordeaux or Two Buck Chuck — is not recognized as having any value at all.

Meanwhile, the yellow metal passes the test with flying colors.

The second statement posed to the panel was, "There are many factors besides US inflation risk that influence the current dollar price of gold."

To this question 73 percent strongly agreed and 27 percent simply agreed.

MIT's Daron Acemoglu strongly agreed with this statement and commented, "Gold is intrinsically close to useless, so its price is determined as a 'bubble.'" Gold has been used for thousands of years as a medium of exchange and store of value. It's jaw-dropping to know a professor at MIT believes gold is useless. In fact it is the dollar and US Treasury debt that are the greatest bubbles the world has ever seen.

Professor Nordhaus also strongly agreed and wrote, "There is no discernible connection between gold price and CPI movements in the period since the demonetization of gold in 1971."

Really? This chart plotting the price of gold and CPI portrays a strong connection.

The connection reflected by the chart would be even stronger if John Williams's shadowstats SGS-CPI were used instead of the BLS's hedonically adjusted numbers.

LBJ's guns-and-butter policy of the 1960s combined with Nixon's big-government conservatism, each facilitated by a compliant Fed, led to Nixon's unshackling the dollar from its last faint gold restraint. The resulting stagflation of the 1970s brought on the cry to return the dollar to gold.

Bush and Obama's drones-and-caviar policy makes LBJ and Nixon look like rock-ribbed fiscal conservatives. The money printing has been relentless, and the yellow metal's price merely reflects this quaint old definition of "inflation."

To ask the question if 2012 is 1980 all over again answers the question as to why returning to gold is imperative. The nightmarish economic outcomes caused by being, as Jim Grant says, on a "PhD standard" demand change, and more people realize it each and every day.

Fiat paper, whose use is mandated by the state, is the PhDs' money; while gold, with a value derived from trade, is the people's money.

The people want their money back from the ivory tower — before it's too late.