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PaperclipPerfector  12d ago (text post)   2445 thread views

Small-Scale Question Sunday for April 6, 2025

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

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In the opinion of at least one prominent economist, the ideal currency would be, neither fiat nor based on a single commodity (such as gold), but based on a bundle of multiple commodities.

By that standard, is the S&P GSCI, an index of commodities weighted by global production (or the iShares ETF based on that index), effectively the "one true currency" against which all government-issued currencies should be measured?

but based on a bundle of multiple commodities.

That was the plan for the (still hypothetical, possibly defunct) BRICS dollar.

Wasn't there a Paul Ryan proposal along those lines? He's always been a bit of a nerd so I wouldn't be surprised if it was based on actual economic theory.

It does seem so.

Unlike Ryan’s other thoughts on monetary policy, he has not been as vocal about why he wants the Fed to follow the price of a basket of commodities, or which commodities he would want to follow and why. Ryan made his preference for this policy clear in two Wall Street Journal op-eds. In “Blame Congress for Inflation” (May 1, 2008) Ryan wrote:

[My] bill, called the Price Stability Act of 2008, allows the Fed to choose how it will put this single mandate into practice (my preference would be an explicit price rule anchored to a basket of commodities), as long as its overriding policy goal is to control inflation.

And in a piece titled “A Republican Road to Economic Recovery” (March 2nd, 2009):

I believe the best way to guarantee sound money is to use an explicit, market-based price guide, such as a basket of commodities, in setting monetary policy. A more politically realistic path to price stability would be for the Fed to explicitly embrace inflation targeting.

FrumForum contacted Ryan’s office for clarification of this policy preference, asking which commodities he thinks need to be in the basket and how Ryan would respond to criticisms of this policy. Ryan’s office responded by providing links to his op-ed, and clarified that Ryan was not in favor of a gold standard, but was not able to provide any additional information beyond that.

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