Atlas Foundation Conference on
“Consequences of Progressive Policy on Money and Investment”
Dallas, TX, 1 April 2011
I’m grateful for Alex Chafuen’s invitation—I’ve long admired his work—to take part at the Atlas Foundation conference on the consequences of progressive policy on money and investment, on this panel on the principles of sound money. I’d like to draw on a chapter in my recent book, Redeeming Economics, to explain why both American and world history show that only proper monetary reform—specifically, restoring the international gold standard without official-reserve currencies—will end three longstanding problems which have undermined the United States: first, endlessly expanding federal deficit spending; second, chronic episodes of inflation (or deflation) leading to recession; and third, declining U.S. international competitiveness. I’ll close by explaining why the reform that eluded President Ronald Reagan is now finally doable.
To put these problems in perspective, we must recall that the stability of the U.S. dollar has varied widely in history. This variation is explained by two factors: first (as Mark Wynne of the Federal Reserve Bank of Dallas correctly noted), how policymakers in this country set the monetary standard for the dollar; but also (which he did not mention), whether policymakers in other countries use securities payable in dollars as their own monetary standard—that is, use the dollar as their official “reserve currency.”