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One Cross of Gold, Coming Up
How the government could get even with right-wing cranks.
By THOMAS FRANK
These are polarized times, but one thing everyone agrees on is that it sure is great when government makes a profit.
Supporters of President Obama like to point to recent TARP-loan payoffs, plus interest, as an example of federal success. His opponents, by and large, have long held that government should be run like a business; their former leader, George W. Bush, once announced that "government should be market-based."
It is a terrible idea. Were the government actually to begin understanding itself as a market-based, profit-maximizing enterprise, determined to bring down the deficit by whatever means present themselves, can there be any doubt what it would do?
It would sell gold. Oh, it would sell lots of gold. It would put Fort Knox on eBay. Mr. Obama could film the TV commercials.
The first reason for this is obvious: The price of gold is over $1,100 per ounce, near its all-time high in nominal dollars. At that price, the Treasury's 261 million of ounces of gold would be worth nearly $300 billion. Meanwhile, the government's enormous hoard of the stuff is valued by the Treasury—according to a Web page entitled, "Fun Facts About the United States Mint"—at only $42.22 per ounce. If they're saving it for a rainy day, that day has arrived.
I know what you're thinking: Stupid liberal, if the Treasury started unloading its gold—if it gave even the merest hint of doing so—it would send the price of that commodity plummeting.
Which brings us to reason two. The other day, as I watched the zillionth commercial for gold investments flicker by on Fox News, I thought to myself: What would happen to the American right if the price of gold suddenly tanked?
As anyone knows who has Googled the phrase, "FDR Gold Confiscation," gold has long been the obsessive investment choice of a certain species of antigovernment crank. Its allure is especially strong for the disaster cohort—for those who believe that hyperinflation is just around the corner; that default by the U.S. government is a real possibility; and that democracy itself is something of a fraud, a populist Ponzi scheme pulled off by slimy politicians and the central bankers they've hired to run the printing presses.
One reason gold has been bid to its current stratospheric heights is because more and more investors and fund managers have signed on to this dark belief that America's judgment day has finally come.
Were the administration to get started on the great gold dump, however, we'd come to a different judgment day very quickly. When the massively inflated price of that metal collapsed, it would probably take with it a hefty chunk of the portfolios of tea-party types, survivalists, Birchers, dittoheads, Objectivists and almost every imaginable species of secular end-timer.
Achieving such an effect might not even require selling the gold, either: The government could conceivably collapse the price merely by implying that it intended to sell the stuff.
Of course, it is an article of my corny liberal faith that government should never craft policy merely in order to damage its partisan opponents. But if you believe that government should be run like a business, then this, too, becomes thinkable. It was the supremely market-minded men of Republican Washington, after all, who made "Defund the Left" into one of their movement's guiding principles. It was they who dreamed up the "K Street Project" and the other schemes that were designed to reward GOP loyalists and redirect the revenue streams of the Democratic Party.
If it's all about profit, why not take a page from that playbook? Besides, the right already believes Mr. Obama to be an unholy amalgam of Machiavelli, Pol Pot, and Bathhouse John Coughlin, guilty of the worst deviltry Chicago has to offer. Why not serve a little up?
Just for fun, the administration could then smooth the whole thing over with some tactical libertarian cant. It might declare that the price of gold had been propped up artificially for decades by the state's irrational hoarding. Privatization is a far better option, administration officials might purr. It lets the market speak.
And so, in an irony worthy of Oscar Wilde, it would be the gold-investing contingent of the right who would discover that they had risked their fortunes on the whim of the very government they distrust and despise.
But it is the opposite irony that probably ensures that a great gold-dump will not take place. In addition to denting the holdings of countless extremists, such a move would also deal a massive blow to the hedge funds that have reportedly made enormous bets on the barbaric metal. Their losses would then reverberate through the financial system, inevitably shaking the institutions deemed "too big to fail." And before long, government would have to ride to the rescue of those who have wagered so much on the government's collapse.
Write to thomas at wsj.com