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The Politics of Money

Go bold with gold.

Jul 21, 2014, Vol. 19, No. 42 • By JUDY SHELTON
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Yet there has been no mechanism for such reconciliation since the demise of the gold-linked Bretton Woods system in August 1971. The International Monetary Fund was established in 1945 to oversee that system—to enforce the rules of fixed exchange rates among currencies and gold convertibility of the dollar—but today no global anchor exists to impose monetary discipline and curtail excess liquidity. At a Vienna conference in February, former IMF head Jacques de Larosière described the monetary setting leading up to the 2007-2008 crisis as something worse than a nonsystem: an “antisystem.”

International monetary disorder continues to undermine productive growth even as the threat of reflating bubbles -portends yet another financial crash—perhaps on the next American president’s watch. Can anyone doubt that this would devastate the future of democratic capitalism along with the global economy?

When former World Bank chief Robert Zoellick, an intellectual heavyweight in Republican circles, suggested in November 2010 that a new global monetary system might “consider employing gold as an international reference point for gauging market expectations about inflation, deflation, and future currency values,” it caused a stir but no action. Former Alaska governor Sarah Palin similarly argued for fundamental monetary reform, inveighing against “temporary, artificial economic growth” caused by the Fed’s pump priming. “We want a stable dollar combined with real economic reform. It’s the only way we can get our economy back on the right track.”

Republicans need to expound boldly on the need for sound money; it should be a vital campaign issue, as important as fiscal responsibility and coherent foreign policy. Leadership and vision are required if America is to recover its economic strength and reassert its moral purpose.

Judy Shelton, author of Money Meltdown: Restoring Order to the Global Currency System, is a senior fellow at the Atlas Economic Research Foundation and codirector of its Sound Money Project.

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