Letter to the editor: Restore a metallic dollar now
· The Washington TimesOPINION:
I’ve written for more than 40 years about the “reserve currency curse”: America’s heavy burden of supplying the world’s “reserve currency.”
By devaluing the U.S. dollar from about 1/20th of an ounce of gold under President George Washington to less than 1/4,000th of an ounce today, the markets have made it possible to restore a metallic (gold and silver) dollar.
The task won’t be easy, but it is now doable. So today’s members of Congress must stop bickering and whining and undertake the necessary Hamiltonian reforms. Here they are:
- Rather than merely balancing the federal budget, adopt a flat income tax rate that will generate enough revenue to pay off the entire national debt over four or five decades, just as the U.S. did between 1790 and 1835 by following Alexander Hamilton’s plan.
- Repay the public debt to end the dollar’s use as a reserve currency, and never again permit the practice.
- Define the dollar once again as a fixed weight of gold (say, 1/5,000th of an ounce). This will make the U.S. consumer price index the same decades hence, just as the (reconstructed) CPI was exactly the same in 1913 as it was in 1790. It will also shift the U.S. current account (the broadest measure of international trade) from decades of chronic deficits to chronic surpluses and end America’s deindustrialization and factory-employment decline.
Today’s Congress faces a stark choice: Continue or end after 250 years what President Abraham Lincoln called the American experiment.
JOHN D. MUELLER
Lehrman Institute fellow in economics, Ethics and Public Policy Center
Mishawaka, Indiana
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