Ramaswamy has a big, bold idea for how to change monetary policy. Unfortunately, it demonstrates that neither adjective is a synonym for “beneficial.”
, however, that the Fed focused on commodity prices in the 1980s and 1990s, as Ramaswamy says it did. During that period, as at most times, consumer prices were more stable than commodity prices. If the Fed had been successfully targeting commodity prices, as Ramaswamy claims, the pattern would have been reversed.The drawback of basing monetary policy on commodity prices is that they change for all kinds of reasons that don’t call for central banks to respond.
Central bankers often look at “core inflation,” which excludes food and energy, precisely to ignore some of the most volatile prices. Ramaswamy would have the Fed, instead, ignore the core. Following that advice would have had perverse consequences at key moments. In the first half of 2008 — that is, the first months of the Great Recession — commodity prices were spiking.
The moral of the story isn’t just that Ramaswamy has some half-baked ideas. He has been presenting himself as a Trumpist Republican: “America First 2.0,” as his website puts it. His opposition to aid for Ukraine and his support for pardoning Donald Trump fit that description. On trade and immigration, however, Ramaswamy isThe desire for a commodity-based dollar is another throwback. Trump never adhered to Paul’s grand theory about the Fed or any other.
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