Earlier this week, Steve Forbes published an article calling for developing economic powers to fix their currencies to the dollar or euro as a means to overcome obstacles to growth.
…all of these nations have overlooked a crucial requirement of economic greatness: a stable currency. Investors and entrepreneurs yearn for sound money, just as marketplaces function best when weights and measures are reliable and fixed.
“Ambitious countries must grasp the fact that economies with sound monetary policies always outperform those with chronically unstable money, ” he says, citing Britain as a pinnacle example of a booming economy historically facilitated by stable, gold-fixed currency.
What can today’s aspiring countries do to strive toward the success enjoyed by Britain and other leading economic powers?
They should start by formally fixing their currencies to either the dollar or the euro.
Turkey, for example, could formally tie its ominously weakening lira to the euro and thereby avoid another debilitating slide into a big inflation.
Sound currency would also strengthen countries suffering from international pressure:
A currency board would work wonders for beleaguered Ukraine. It’s no surprise, given Vladimir Putin’s aggression, that Ukraine’s currency, the hryvnia, has slid sharply, hurting the economy.
India would also set itself on a path to rival existing superpowers, including Britain:
In a few years India would be in a position to take the next step and adopt a gold standard. Within a generation of doing that it would surpass the economy of its former colonial master, Britain, as well as that of China.
You can read Forbes’ complete article here.
Noah Muscente works for American Principles in Action.