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"The substantial swings we have experienced in dollar valuation since the dollar was floated against gold and other currencies have been very burdensome to the economy, and ought to be ended"

In theory the idea of floating currencies should be the best system as it should reward the most disciplined Governments with a higher currency value. In practice it has been a disaster as Governments attepmt to manipulate their currency for political reasons.

I now advocate an implied Gold standard wherein the Fed would transparently use a price rule to add or subtract liquidity from the banking system based upon this rule. This system would work much better than current system and transactions costs associated with financing would fall across the broad. We still do not have adequate cooperation with our main trading partners, however, in order to full utilize such a system.

The ECB is pursuing a tight mentary policy even through the French, German and other EU economies are choking. The Japanese are still clinging to their export led economic model which demands an artificially low Yen value; the Chinese are pursuing a similar strategy with their currency. It is not sustainable for the US to be the only buyer.

The current deflationary pressures in the world economy are a result of Government subsidized over investment in a number of export industries. The South Koreans have the way out the current mess by liquidating some of their redundant capacity and stimulating internal consumer demand in order to replace sales from exports. The other Asian countries should be looking to South Korea for a solution to their problems.

A stable dollar can be achieved by targeting the price of gold at $350, and keeping it there by buying or selling government securities on the open market to add or subtract dollar liquidity as needed. If other currencies rise or fall against a stable dollar, and continue to do so after the proper equilibrium is achieved, those other currencies will simply harm their own economies. I think a stable dollar will encourage stability in other currencies, and will certainly be a great benefit to the U.S. economy.