Robert A Mundell
As Robert A Mundell suggested in his paper The International Monetary System in the 21st Century, gold can be replace current international monetary system for this 21st century. For him, the gold significance is very attractive. Back then also at 1960’s people were deliberating about the future of the international monetary system, gold figured importantly in the discussions.
In his work, his suggest that nowadays need to come back to history itself which the international monetary system was linked to gold-which today it is totally demolished. It will lead the system to be interdependence, the exchange rate will be fixed and also inflation can be stabilized. This is right as we can see current situation when the US has problem which called sub-prime issues and credit crunch has led each country follow to be in recession. What we can say that the prediction of the dollar crunch has been shown and occurred.
The ‘superpower’ will not make it happened as they will not doing monetary reform because it will demolished their power in control other country. He assured that whoever becomes the ‘superpower’ they will not agree with the monetary reform as it has shown in the history itself.
The Bretton Woods conference actually develops IMF and World Bank as it is beginning ‘the history of Dollar’.
Monetary reforms and back to gold as currency needed because it leads to protect from inflation. It also can combatant the case of deflation. Current monetary policy leads to hyper inflation. But he insists that there is no need to fix the gold price. This is because the gold itself is stability and have intrinsic value.
He also denominate that monetary reform should be implementing as he also stated that current monetary reform lead to many problems as it control by one ‘superpower’ which give disadvantages to the world of economy itself.
The establishment of the Federal Reserve which is vehicle to spread the dollar is a mistake because it is total lost for developing country.
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