The case for a return to the gold standard
While the issue of causation versus correlation can be argued all day, Louis Woodhill at Forbes makes a compelling case for moving the dollar out of the “fiat currency” category and once again pegging it to a known standard. Like gold.
I suppose when the dollar was moved off the gold standard, it was viewed as a radical and wild-eyed idea (or maybe not, since it was politically inspired and handed politicos the keys to the printing presses), just as a return to a standard is now viewed as archaic, an anachronism, and basically, freaky-deeky. The floating dollar was sold as temporary issue (part of the Nixon shock) and—whatyaknow—it became permanent.
But the real issue is one of control. When the dollar is tied to a standard, crony capitalism, rent-seeking, and regulatory capture are more difficult for the government to practice. The best impact of returning the dollar to a standard is that this “malinvestment” (think dot com and housing bubbles and the looming entitlements hard-landing/implosion, AKA inflation) would seem to be less likely to occur, largely because investment risk would decrease.
The loss of flexibility (that is, a diminished ability for our enlightened elites to influence the economy—to pick winners and losers) would be the downside…but only for the aforementioned enlightened elites.