The True Gold Standard (Second Edition)
To bring up the word ‘gold’ in the context of proposing future global monetary arrangements has long meant to put at risk one’s intellectual credibility. But widespread dissatisfaction with the current state of affairs, with the dollar and euro engaged in a race to the bottom while emerging-market countries are left to wrestle with exchange rate distortions and rising trade pressures, is prompting the search for new solutions.
In the US, meanwhile, the populist movement to restore values associated with the founding of the nation has already had a remarkable impact on political developments. Leaders with economic savvy, such as Paul Ryan, the House Budget chairman, have advocated a return to “the American system of limited government, low taxes, sound money and the rule of law” as the best way to renew economic prosperity. Indeed, during the widely viewed televised Republican presidential debates, the phrase “sound money” was frequently invoked by various candidates. The notion that sound money must be part of any pro-growth economic agenda meant to challenge the current administration is becoming a mainstream assumption. While remedies vary, candidates are increasingly being asked whether they would support a return to the gold standard.