A thank you to a blog reader (a former correspondent for Time magazine who prefers to remain anonymous) who alerted me another formal proposal to consider a return to the gold standard. In an earlier article, we featured the work of Dr. Lawrence White who also speaks favorably about returning to the gold standard. In that article, I made this comment:
"There are a variety of ideas on how gold might return to the monetary system, but until I learned of this information from Dr. White I had not run across a formal proposal for how to transition back to an actual gold standard."
The blog reader mentioned above picked up on that comment and sent me an email that encouraged me to look at another proposal for returning to a gold standard. The reader had this to say:
"In your June 23rd post: "Dr. Lawrence White - Experts and The Gold Standard” you cite a range of proposals “for how to return to a gold standard.” Let me add to it the following work: The True Gold Standard - A Monetary Reform Plan without Official Reserve Currencies (Second Edition - Newly Revised and Enlarged). "
I am also advised from the reader that John D. Mueller made some contributions to the book linked just above. Mr. Mueller is The Lehrman Institute Fellow in Economics at the Ethics and Public Policy Center in Washington DC. He was a featured speaker at the Kemp Forum in Washington DC that we covered here earlier this year. The book was authored by Lewis Lehrman and offers his view on why we should return to the gold standard. Mr. Lehrman served in Reagan Administration and was on the US Gold Commission along with US Congressman Ron Paul.
I reached out to John D. Mueller for any comments he might have on the book. He replied with these comments:
"Lewis Lehrman is a remarkable man. Trained as a historian at Yale and Harvard, he became a successful businessman (helping found Rite-Aid drugstores)—in Lew’s telling, after Lew’s graduate fellowship was cut by 25% and Lew’s father remarked that perhaps he should try a field with more economic promise. Lew made and spent a couple of fortunes supporting public-spirited efforts including international monetary reform. One website organized by The Lehrman Institute,thegoldstandardnow.org, is a treasure trove of articles on sound monetary reform, and includes extended interviews with experts like Lew Lehrman and Dr. Larry White. Lew Lehrman’s occasional op-ed articles are also a crash course in American history: http://www.lewiselehrman.com/
I can join in heartily recommending the book mentioned to you by your blog reader, The True Gold Standard - A Monetary Reform Plan without Official Reserve Currencies (Second Edition - Newly Revised and Enlarged).
(My role was limited to providing charts and appendices for the second edition.) In it, Lew Lehrman answers the question, how would one actually implement a workable gold standard? The provision mentioned in the subtitle—that any new system must eliminate official “reserve currencies”—is vital to the success of such a plan. I discussed the reasons in my recent talk at the Jack Kemp Foundation forum on exchange rates and the dollar." --- John D. Mueller
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My added comments: Interestingly, in his presentation at the Kemp Forum earlier this year, John D. Mueller said he felt these were the three main alternatives for the global monetary system in trying to solve its problem (The Triffin Dilemma):
a) muddle through until the (US) dollar standard's collapse.
b) turn the IMF into a world central bank issuing paper (SDR) reserves.
c) turn to a modernized international gold standard.
This is pretty much what we have been saying here on this blog as well. I will add that the Real SDR proposal (Dr. Warren Coats) that we have featured here is somewhat different than option (b) above as I understand it. While it does involve using the SDR as global reserve currency, it would change IMF rules so that the currency was issued under Currency Board rules (based on public demand, not IMF discretion) and also would anchor it to a basket of goods (not to the five currencies in the current SDR basket). I do not believe Dr. Coats supports giving the IMF arbitrary discretion to issue SDR's. Readers can look into this more in depth in this recent blog article. Robert Pringle has another more "out of the box" proposal he calls The Ikon also covered in that article.
At this point in time, it seems as though we are clearly still under option (a) above. This blog watches for any indications that change from option (a) might be underway to option (b) or option (c) or something else. These days some believe that something else might be decentralized cryptocurrencies (not issued by any central bank). Cryptocurrencies seem like the least likely alternative to me for a variety of reasons to lengthy to discuss here, but there are people who think otherwise. We covered what we think is the current status of cryptocurrencies in this recent article. Our goal here is to present readers with what we believe are the most likely scenarios for monetary system change and encourage them to learn as much as they can about them.
We greatly appreciate all the contributions from the various experts we have featured here on various ideas and proposals for monetary system change. Readers here benefit from their knowledge and generosity. I would like to add a special thank you to John D. Mueller for taking time to offer his thoughts included above.
Added note: I received this additional comment by email from John D. Mueller. He kindly granted permission to add it to this article:
My added comments: Interestingly, in his presentation at the Kemp Forum earlier this year, John D. Mueller said he felt these were the three main alternatives for the global monetary system in trying to solve its problem (The Triffin Dilemma):
a) muddle through until the (US) dollar standard's collapse.
b) turn the IMF into a world central bank issuing paper (SDR) reserves.
c) turn to a modernized international gold standard.
This is pretty much what we have been saying here on this blog as well. I will add that the Real SDR proposal (Dr. Warren Coats) that we have featured here is somewhat different than option (b) above as I understand it. While it does involve using the SDR as global reserve currency, it would change IMF rules so that the currency was issued under Currency Board rules (based on public demand, not IMF discretion) and also would anchor it to a basket of goods (not to the five currencies in the current SDR basket). I do not believe Dr. Coats supports giving the IMF arbitrary discretion to issue SDR's. Readers can look into this more in depth in this recent blog article. Robert Pringle has another more "out of the box" proposal he calls The Ikon also covered in that article.
At this point in time, it seems as though we are clearly still under option (a) above. This blog watches for any indications that change from option (a) might be underway to option (b) or option (c) or something else. These days some believe that something else might be decentralized cryptocurrencies (not issued by any central bank). Cryptocurrencies seem like the least likely alternative to me for a variety of reasons to lengthy to discuss here, but there are people who think otherwise. We covered what we think is the current status of cryptocurrencies in this recent article. Our goal here is to present readers with what we believe are the most likely scenarios for monetary system change and encourage them to learn as much as they can about them.
We greatly appreciate all the contributions from the various experts we have featured here on various ideas and proposals for monetary system change. Readers here benefit from their knowledge and generosity. I would like to add a special thank you to John D. Mueller for taking time to offer his thoughts included above.
Added note: I received this additional comment by email from John D. Mueller. He kindly granted permission to add it to this article:
"Since option A is inherently doomed, I think we will wind up the only sustainable option, option C, after more or less painfully exhausting the alternatives."
All the best,
John
*****
John D. Mueller
The Lehrman Institute Fellow in Economics
Director, Economics and Ethics Program
Ethics and Public Policy Center (40th Anniversary)
1730 M St. NW, Suite 910
Dear Woodpecker, focus on creating an international store of value not tied to money, marked to market and the rest will be easy. Yours, Chaffinch
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