Judy Shelton: How a gold-backed bond could open an avenue to monetary reform


By Judy Shelton
New York Sun
Saturday, September 5, 2015

Today's global economy is so utterly dependent on the latest move by a major central bank, or even the latest utterance of any semi-important monetary official, that it seems scarcely able to function without gleaning hints about the next big monetary policy decision. But why has a global obsession with "monetary policy" become more important than money itself? How can we reconnect money to its more fundamental purpose of providing a tool of measurement for real economic performance? ...

Pity those who actually produce real goods, though. Mere manufacturers can't operate with the nimbleness of savvy financiers. If only money worked for them as a meaningful unit of account and a reliable store of value. ...

Why not allow the private sector to decide what fiat money issued by central banks is worth in terms of a universally-acknowledged surrogate for real money? Gold serves as a common denominator for value across borders and through time; it has historically represented a true measure of monetary value. If the U.S. Treasury were to issue a bond that could be redeemed at maturity in either dollars or gold -- at the option of the bondholder -- it would send an important signal that America recognizes the need to reverse the trend toward financialization of the economy in favor of encouraging genuinely productive output. ...

More significantly, it would establish a vital beachhead toward building a stable monetary foundation to support international trade based on a level playing field. Trading partners could emulate America’s example by moving away from currency manipulation in favor of gold-convertible money. ...

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