Do I agree with Reisman’s argument?
The parties entering into new contracts should be free to include whatever degree of gold clause protection that was mutually agreeable. What presently stops such contracts from being made are considerations both of their enforceability in the courts and their likely treatment for purposes of taxation.
To an extent, yes. But not entirely. Of course I believe that gold clauses should be entirely legitimate, and not subject to onerous capital gains taxations, as they are at present. But I cannot support the argument that creditors should be allowed to insert gold clauses into existing contracts.
Reisman argues that,
The insertion of a gold clause into existing contracts should by no means be regarded as any kind of new and additional government interference with the freedom of contract.
But insofar as existing contracts are only debt obligations, not financed by previous capital accumulation, I have to respectfully disagree. A gold clause, inserted thusly, insulates creditors who have already been the beneficients of government meddling. They have created an obligation ex nihilo, and would expect payment in full regardless of whether inflation continues or the accuracy of their forecasting.
As much as I support the underlying concept of gold clauses (or any commodity clause, for that matter) I have an equal, if not greater disdain for any so-called free-market supporter who advocates insulating creditors (i.e., predominately oligopolistic banks) from risk via ex post facto law. [Note to the strict constitutionalists: ex post facto laws are in direct opposition to the letter of the law as enumerated in the Constitution.]