My friend, Warren Coats, who spent a career at the International Monetary Fund before retiring in 2003 (and who taught economics at the University of Virginia before joining the IMF) has posted an interesting and informative paper that he presented Thursday at FreedomFest in Las Vegas. (Las Vegas in July...... mmmmm! Actually, I wish I was there. The program looked intriguing and intellectually stimulating.)
Warren's paper is entitled "Should the U.S. adopt a Gold Standard?" and, while presenting the pros and cons of such a policy, his ultimate answer is "no."
His full paper is well worth reading, but I will just excerpt the conclusion here:
Revolution March on Washington, where many gold bugs will be in attendance. I've always been an agnostic on the gold standard, but when a libertarian thinker like Warren Coats suggests that going back to the gold standard is a poor policy choice, my agnosticism gives way to atheism.
The United States should not adopt a gold standard. Such a regime would have prevented the Federal Reserve from supplying the additional liquidity the banking system suddenly demanded this past year as part of the subprime mortgage crisis. Without the injection of the additional liquidity, there would probably have been a financial sector meltdown and recession of hug proportions. Had the U.S. had a gold standard, it would not have survived such a financial crisis.
The United States should adopt inflation targeting. The Federal Reserve act should be amended to establish price stability as the primary objective of monetary policy, freeing the Fed from its statutory requirement to “to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”
Not that that will stand in my way of attending the rally on the west side of the Capitol tomorrow. The Revolution takes place under a big tent.