Stable money is the next big growth issue. To their credit, many of the Republican candidates have talked about this — which is unusual for a presidential race. Some, like Cruz and Paul, have discussed restoring the gold rule. Others, like Mike Huckabee, have argued for tying the dollar to a commodity basket.
I prefer an even broader approach that would include the exchange value of the dollar and Treasury-bond-market inflation expectations. In each case you would track forward-looking inflation-sensitive market-price indicators, as was done from the mid-1980s to mid-1990s by former Fed board members Wayne Angell, Manley Johnson, Robert Heller, and Alan Greenspan — all Reagan appointees.
I’d also have no problem keeping a sharp eye on the growth of nominal GDP. But as Paul Volcker has argued, we should return to a rules-based monetary policy with international cooperation.
And as the GOP searches for a monetary rule, it should not become the party of high interest rates. (I don’t agree with Trump and Chris Christie that a zero-interest-rate political fix is in to help Obama through his final months without a recession.) Right now, with commodity indexes falling, the dollar rising, and various consumer price deflators showing zero inflation, neither the Republican party nor the Fed should panic. Domestic price stability and a steady-value dollar should be the goals.
Maggie Gallagher is a senior fellow at the American Principles Project.