Must-read: Barry Eichengreen: “Reforming or Deforming the Fed?”

Must-Read: Barry Eichengreen: Reforming or Deforming the Fed?: “We have proposals by Republican candidates Ted Cruz, Rand Paul, and Mike Huckabee…

…to require the Fed to maintain a fixed dollar price of gold. To call these actual proposals is a bit generous…. [Would] the Fed… be obliged to provide gold at this price to all… as before 1933, or only to foreign governments, as between 1945 and 1971….[Could] that obligation could be suspended in an emergency, as in those earlier eras[?] More fundamentally, they fail to… clarify why the Fed should focus on stabilizing the price of this particular metal, rather than on the price of a representative basket of goods and services. Indeed, if the critics focused on the latter, they could give their proposal a name. They could call it ‘inflation targeting.’