A Sane Mitt Romney Distinguishes Himself on Monetary Policy

Mitt Romney does not cling to the gold standard like some of his GOP competitors.

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A key feature of former Gov. Mitt Romney's recently-introduced jobs plan is a demand that China adopt a floating exchange rate for its currency.

Smart move.

The plan rightly says of China's currency manipulation: "The practice provides an invisible subsidy to Chinese goods sold internationally and an invisible tariff on other nations attempting to sell in China." [See photos of the GOP hopefuls on the campaign trail.]

By implication, Romney's call for China to lets its exchange rate float means that he believes that America should (continue to) let its exchange rate float. It's depressing that this is at all noteworthy: Mitt Romney, therefore, does not believe that America should return to a gold standard.

This sets him apart from Rep. Ron Paul and possibly Rep. Michele Bachmann ( she's "thinking about it"). Not that anyone cares, but the departed Tim Pawlenty also made silly noises about America's "fiat money."

Romney's good sense on these matters extends to a broader acceptance of Federal Reserve authority. Drawing an important line in the sand between himself and Gov. Rick Perry, Romney, in a recent interview with CNBC's Larry Kudlow, refused to mudwrestle with Ben Bernanke. "I think Ben Bernanke is a student of monetary policy; he's doing as good a job as he thinks he can do," he told Kudlow. "I'm not going to spend my time going after Ben Bernanke. I'm not going to spend my time focusing on the Federal Reserve." [Read: Romney's Jobs Speech Targets Obama, Not GOP Foe Perry]

Going back a to the last election, I stumbled on this now-heretical-sounding "Republican stimulus plan" that Romney touted on National Review. In 2008, Romney sounded awfully congenial, and not a little like "liquidity trap" watchdog Paul Krugman:

As Christina Romer, Barack Obama's designee as chairperson of the Council of Economic Advisors concluded from her study of the Great Depression, bad monetary policy was its greatest cause and good monetary policy was its most effective cure. The Fed should continue to expand the money supply [emphasis mine]. And, it should confirm that it will not tolerate deflation—the pain of inflation pales in comparison.

Mitt Romney may be a robot, but he's a robot that's been programmed for sanity.