Under the title ‘Monetary reform would rebalance trade’ a very interesting op-ed appeared in the Wall Street Journal of March 28th

In the thought provoking article Mr. Rushton, director of the Project on Exchange Rates and the Dollar at the Jack Kemp Foundation, writes:

‘Contrary to claims coming from some trade hawks, America’s large and persistent trade deficit is not caused primarily by bad trade deals. The U.S. dollar’s status as the global reserve currency is at least as responsible as any free-trade agreement or unfair practices. High demand for dollars has tilted the playing field against American exporters and workers. Those arguing against tariffs — including Republicans courting blue-collar voters in the industrial Midwest — should be leading the charge for international monetary reform [..] Leveling the playing field will require reducing global demand for dollars, first by stabilizing the dollar and other major currencies, then by establishing a new international reserve currency. Here’s how to do that:

• First, to guide monetary policy, Federal Reserve appointees should commit to targeting the real-time prices of an index of commodities, plus foreign currencies and bonds. Such an approach would have prevented the Fed’s biggest recent errors. Easy money in the 1970s and 2000s led to large increases in world dollar holdings, price bubbles and crashes.
• Second, the U.S. should invite other major currencies — starting with the second-largest, the euro — to stay steady with the dollar. A dollar-euro stability pact, later including Japan and other democracies, would stabilize demand for dollars. A recent International Monetary Fund communique expressed positive sentiments on this front: “We recognize that excessive volatility or disorderly movements in exchange rates can have adverse implications for economic and financial stability. We will refrain from competitive devaluations, and will not target our exchange rates for competitive purposes.”
• Third and most controversial, the U.S. and other leading economies should establish a new international currency for pricing global commodities and settling trade accounts. Nations would keep their own currencies for domestic use, exchanging them for the international currency at fixed rates.

The Nobel laureate Robert Mundell suggested such an international currency, to be backed 50% by gold and 50% by the world’s five leading currencies. Rep. Jack Kemp once proposed solving the “reserve currency curse” with a return to the full international gold standard. Other ideas, such as expanded use of the IMF’s reserve asset, the Special Drawing Right, are also worth considering.

If the U.S. has reached the end of its rope and is unwilling to feed the world’s demand for dollars through its trade deficit, then international monetary reform is the answer. 

Yep, that’s what we call a Big Reset of the international monetary order.

Full text can be found at this GATA-link

Note:  Congressman Jack Kemp – in partnership with future Nobel laureate Robert Mundell and others – hosted a series of conferences on the dollar and international exchange rates in the 1980’s