Thirty-two years ago, presidential candidate Ronald Reagan suggested the United States needed a dependable monetary standard. Unfortunately, serious efforts in this regard were not exercised. As a result, credit and debt exploded, causing the most severe financial collapse in 75 years.
The Republican presidential platforms of 1980 and 1984 encouraged a more effective monetary framework.
The 1980 Republican presidential platform included the following:
“The severing of the dollar's link with real commodities in the 1960s and 1970s, in order to pursue economic goals other than dollar stability, has unleashed hyper-inflationary forces at home and monetary disorder abroad, without bringing any of the desired economic benefits. One of the most urgent tasks in the period ahead will be the restoration of a dependable monetary standard — that is, an end to inflation.”
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The 1984 Republican presidential platform built on this premise by stating: “The Federal Reserve Board's destabilizing actions must therefore stop. We need coordination between fiscal and monetary policy, timely information about Fed decisions and an end to the uncertainties people face in obtaining money and credit. The Gold Standard may be a useful mechanism for realizing the Federal Reserve's determination to adopt monetary policies needed to sustain price stability.”
However, this concept was not seriously considered in subsequent platforms — until now. Drafts of the 2012 Republican presidential platform might request an audit of the Federal Reserve Bank and a commission to examine restoring the link between gold and the U.S. dollar. Recently, the U.S. House of Representatives passed the Federal Reserve Transparency Act of 2012 (H.R. 450) in bipartisan spirit, 327-98, with all but one Republican and 89 Democrats voting in the affirmative.
Re-establishing the link between commodities and the U.S. dollar will provide the essential capital reserves for a stable currency regime. The level of capital reserves could be 20 percent to 30 percent of the nominal currency value. In addition to gold, silver may be considered as a bona fide proxy to back fiat currencies.
This methodology would promote monetary and price stability as well as purchase-power parity.
It deserves serious debate.
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