Financier, philanthropist and Reagan Gold Commissioner Lewis E. Lehrman called the policy, in testimony one year ago before the House Financial Services Subcommittee on Domestic Monetary Policy, “the least imperfect monetary system tested in the only laboratory we human beings have available to us: the laboratory of human history.”
It certainly is enjoyable to watch Bernanke publicly debating Bernanke. Yet opposition to the gold standard based on artifacts of what then-professor Ben Bernanke, in a 1990 NBER Working Paper (writing with Harold James), called a “mismanaged international gold standard” no longer is intellectually sustainable.
It would be more edifying to get the powerful Bernanke intellect focused on why the world dollar standard has performed, in the view of the most venerable central bank in the world, so poorly respecting each of the objectives of a world monetary system — and to learn what Bernanke thinks about how we might replace the dollar as a reserve asset?
What does the chairman think about the fairly recent suggestion by Nobel prize laureate in economics and Columbia University professor Robert Mundell, of a neutral reserve asset that is “nobody’s liability and ... can’t be printed. So it has a strength and confidence that people trust.” Mundell, of course, was describing gold, a la Bretton Woods.
While we are engaging Bernanke in this discussion, let’s be sure to cover the Bretton Woods institutions — and to take the discourse up a notch by fully including a reappraisal of the classical gold standard option — the one contemplated by the Constitution after the trauma of the paper Continental dollar. The monetary system termed by one Gov. Ben Bernanke “highly successful.”
Ralph Benko, a weekly contributor to Forbes.com, is the senior adviser on economics to American Principles in Action and the editor of the Lehrman Institute’s monetary policy website.