A sound monetary and banking system is the foundation of
economic growth and industrial progress. Our central bank, the
Federal Reserve, claims, by mandate, to maintain “stable prices”
and “full employment.” Yet its record is one of chronic monetary
instability. Because money is the essential link between all the
diverse, coordinated sectors of our economy, this instability is
the root of the painful boom-bust cycles that have repeatedly
undercut economic growth over the last century. Fortunately, the
idea that the Fed should be radically reformed or abolished is
starting to gain currency among Republican politicians. But that
raises the question: What is the alternative? “The gold
standard” is not a sufficient answer. Which gold standard? One
administered by a central bank like we had from 1913 to 1933?
One hindered by onerous and distortionary banking regulations at
the federal and state levels like we had before that? The
ultimate question, in fact, is not so much about what ought to
be the monetary standa