Gold and Government

15 Pages Posted: 31 Mar 2013

See all articles by Judy Shelton

Judy Shelton

Atlas Economic Research Foundation; Sound Money Project

Date Written: June 15, 2012


Something has gone terribly wrong with the world’s monetary system. It’s evident that some kind of fundamental reform needs to be implemented. The question is: Can governments be trusted to issue sound money, or is money too important to be left to the politicians?

Is it reasonable to expect governments to abide by the discipline required to maintain sound money? Or have we set up an irresistible temptation by empowering governments to control both fiscal and monetary policy? Would it make more sense to return money to markets by privatizing money issuance? In this article, I propose a reform that would bring the power of market forces and competition to bear on the challenge of providing sound money while still giving government a principled role in the monetary system.

My recommendation is to introduce a special class of medium-term U.S. government debt obligations to be designated “Treasury Trust Bonds (TTBs).” These zero coupon bonds would grant the holder the right to redeem in either gold or dollars. This article provides details on how TTBs would be structured and how they might spur a transition toward new global monetary arrangements.

The issuance of TTBs would fit into a pro-growth economic agenda based on limited government, low taxes, rule of law, and global free trade. Linking the dollar to gold through TTBs would be a bold step toward completing the original economic agenda laid out by President Ronald Reagan, which called for a stable dollar. Consider it a “trust-but-verify” approach to sound money.

Keywords: international monetary system, free trade, stable currency, exchange rates, Bretton Woods, monetary policy, global economy

JEL Classification: F02, F30, F33

Suggested Citation

Shelton, Judy, Gold and Government (June 15, 2012). Cato Journal, Vol. 32, No. 2, 2012, Available at SSRN:

Judy Shelton (Contact Author)

Atlas Economic Research Foundation ( email )

1201 L Street NW
Washington, DC 20005
United States

Sound Money Project

1201 L Street NW
Washington, DC 20005
United States

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