Pawlenty Jumps on the Anti-Fed Bandwagon
Tim Pawlenty is receiving a lot of criticism for comments he made about monetary policy on Morning Joe, when he argued that the injection of “fiat money” into the economy has weakened it. This isn’t the worst thing he’s said; that honor goes to his Larry Kudlow interview on CNBC where Pawlenty claimed that while doesn’t want to go back on the gold standard, he does think the Fed should tie itself to a basket of commodities. (Click here to watch.)
At the 5:00 mark, Kudlow asks Pawlenty whether or not the dollar should be relinked to gold. Pawlenty at first seems to push back by arguing that “Bretton Woods ended for a reason,” but then he comes out in favor of the commodities standard:
Attaching it [the dollar] only to gold is too narrow... but having some correlation or at least some consideration of a larger basket of commodities I think is worth considering.
As we’ve reported on FrumForum before, a true “basket of commodities” standard of the sort that Rep. Paul Ryan and now Gov. Tim Pawlenty are proposing would cause many of the same problems that the original gold standard had: you would have no monetary flexibility. It would also create new problems since commodity prices are currently being driven up by factors beyond America’s control such as Chinese industrialization and Russian droughts.
Initially, Pawlenty’s “fiat currency” comments on MSNBC and Hannity seemed to just be a clumsy way for him to critique the Fed’s efforts at quantitative easing. In his interview with Kudlow, however, Pawlenty has gone further, to endorse the doctrine that the Fed should tie the dollar to hard commodities that it has no control over. Does Pawlenty truly believe this? At this point, who knows? At this point, Pawlenty's campaign seems an elaborate attempt to create a contrast in which Mitt Romney seems the conviction candidate.
Follow Noah on Twitter: @noahkgreen
Tweet