It is Time for a Currency Debate

Both Ron Paul and Geert Wilders  are presenting arguments for changes to our currency policy. Instead of dismissing the source it is time for real arguments in much needed currency policy debate.

Tomorrow Lombard Street Research (LSR) will present a report on the costs and benefits of Euro and Gilder (gulden) for the Netherlands. The NOS has already brandished Lombard Street Research as Eurosceptic. I do not think this is useful. The PvdA (Labour Party) and  D66 (Liberal Democrats) are now questioning the report before having read it. It would be more helpful if  they waited for the final results, like the CDA and VVD have done.

I was lucky enough to meet the founder of Lombard Street Research Prof. Tim Congdon at the Shadow Monetary Policy Committee (SMPC) in August. The SMPC discussed issues in the Eurozone (see minutes). I do have disagreements with Prof. Tim Congdon and Jamie Dannhauser (also LSR), but they presented reasonable arguments for their proposals and they were happy to discuss differences in opinion, with myself and other interns.

I presented Hayek’s (1974) argument for competitive currencies. Otmar Issing has a good publication on currency competition on the EU. The benefits of currency competition in the context of the EEC, were set out in Vaubel (1979), Wood (1989) and were subsequently urged suggested  to European Finance minister by Chancellor Nigel Lawson as an official policy under the John Major’s Government (HM Treasury 1989). Just last week Ron Paul (video) urged American policy makers to talk about competing currencies in the U.S. Yet Ben Bernanke seemed to dismiss the whole concept and he would not consider it as a serious option.       

I think it is time for a proper debate on the optimal way to decide on the currency we use and I hope the inevitable critics (which may include me), have good arguments and reasonable proposals going forward.