Call for (Gold) Standards?
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Back in business school, I had a gold standard professor who had us all convinced about the efficacy of an American gold standard, and its renewed need. That was quite a while ago.
The gold folks are back, only they don't talk about gold standards. They talk about "commodity" standards of some sort (O'Driscoll).
I'll let others debate about the need of the American currency to rest on a valuation based on a commodity like gold. O'Driscoll raises another interesting point:
The period between boom and bust cycles seems to be shortening. The next bust might occur during Obama's second term. Thus O'Driscoll's suggestion: Solidly force the value of the dollar to follow some commodity, thus preventing the formation of another boom/bust cycle, especially during Obama's watch.
O'Driscoll is trying to help Obama by pointing out that he needs to help a Democrat be elected in 2016. That seems like a long time from now.
Honestly, I don't want another bust. We're not over this one yet - I certainly don't want another one. Is going to a gold standard the way to go? I have no idea. I did learn something, however, and I hope I remember it:
The next bust may occur more quickly than we think.
Having a plan for it might be in order.
Reference
O'Driscoll, Gerald P., Jr. To Prevent Bubbles, Restrain the Fed. Obama would be a fool to trust his economy to the discretion of central bankers. Wall Street Journal. 17 November 2008. http://online.wsj.com/article/SB122688652214032407.html
More from O'Driscoll: Sweden's Model Clean-up
Sweden did things differently during the last banking crisis during the early nineties.
They stabilized their currency, reversed contractions in the gross national product, and reversed rising unemployment, by allowing some banks to fail, recapitalizing others and isolating bad debts (Cronin).
Japan attacked the same problems piecemeal and over a longer time.
Sweden's formula worked better.
We should have a look.
Reference
Cronin, Brenda. Sweden's Path, Not Japan's, Can Guide Cleanup. Wall Street Journal. 1 December 2008. A2. http://forexdaily.org.ru/Dow_Jones/page.htm?id=357115