A Review by Alex Moore
Two weeks ago, delegates at the Republican National Convention nominated Mitt Romney as their Presidential candidate. No surprises there of course, but the party platform did throw up one or two interesting bits of policy. Perhaps the most unexpected was the proposal for a commission to “consider the feasibility” of a return to the gold standard. With the election so close, reaction from the Left has been predictably negative: “An almost comically (and cosmically) bad idea” blogged Paul Krugman in response. And yet while most see the move as little more than political gesturing, aimed in particular at Ron Paul and his followers, opinion polls show that support for the gold standard remains high. Whether the Left likes it or not, gold has returned to the mainstream of political debate.
In The Money Trap, Robert Pringle lays out the case for a “contemporary replacement” to gold, and the quest for an “international approach to securing monetary stability”. His preferred approach – though one he accepts is utopian – is for an international currency unit called the Ikon. The currency would be convertible on demand into a collection of shares traded on the world’s stock markets, and thus anchored to the real economy. Because of this, Pringle argues, market interest rates would be tied to the natural rate, and so booms and busts – of which the financial crisis is the latest notable example – would be a thing of the past. Moreover, unlike gold, the Ikon would not be subject to large swings in its real value; Pringle is clear that a return to gold is “less rational than alternatives”.
Alex Moore works in the Development Economics department at the World Bank in Washington, DC. He has been a Senior Economist at the Experian Group in London. He holds an MSc in Economics and a BSc in Government and Economics, both from LSE. He is an economics PhD student at the LSE.