The Washington Times’s Lawrence Hunter wrote last week that U.S. President-elect Barack Obama has an opportunity to reset the economy and restore the U.S. dollar to its preeminence as the world’s reserve currency by reestablishing the gold standard. He writes:

First, the new president-elect should state his unshakable resolve to preserve U.S. sovereignty over its currency and economy. He must root his resolve in a declaration calling upon the Congress to exercise its authority under Article I, Section 8 of the United States Constitution to regulate the value of the dollar and maintain the standard by which the value of the dollar is measured; and that he will do everything in his power to faithfully execute and implement the law Congress adopts to carry out that responsibility.

Second, President Obama should ask the Congress to establish the standard by which the value of the dollar is measured – the monetary numeraire – by restoring the dollar’s link to gold and defining the measure of the dollar in terms of a specified weight of gold.

Third, President Obama should ask the Congress to send him legislation to sign within his first 100 days as president eliminating the Fed’s discretion to debauch the currency and set interest rates by requiring it to conduct monetary policy subject to a simple, non-discretionary rule. That rule would instruct the Fed to conduct open-market operations (i.e., buy and sell securities in the open market) with the sole purpose of maintaining the dollar price of gold within a narrow statutory band about the statutory price of gold that defines the dollar’s value as a financial measure or numeraire. No large gold reserves are required under such a gold-price rule.

Fourth, in order to ensure that markets, not bureaucrats, enforce the law and automatically maintain a sound dollar, President Obama should ask the Congress to require the U.S. Treasury Department to redeem dollars for gold and gold for dollars upon demand at the statutory price of gold.