In 2000 Mundell wrote about his experiences in an an article I read as part of my Money and Banking course. In it he surveyed the history of the gold standard and noted the problem of expanding the money supply as required to keep the economy growing. This was during the Bretton Woods period, where gold was pegged at $35/oz. to the US$ and all other currencies were pegged to the US$. Mundell was a strong proponent of the gold standard as it provided an efficient means to redress trade imbalances by automatically correcting the relative valuations between currencies via gold flows or revaluation of a currency.

Mundell was an advisor to Richard Nixon and attempted to make the case for revaluing the gold fix of the US$ upward to reduce pressure for gold flow out of the USA during a long plane flight during which he was seated next to Nixon. But Nixon was too distracted to really listen and the opportunity was lost. I find this interesting as it seems it would probably work. The problem is that for most gold bugs the idea of an adjustable peg for gold makes their heads explode. The consequences of not making changes was the US going off the standard and 'closing the gold window' in 1971 - with no formal replacement for international settlements mechanism for FX.

"It is not necessary to have hope in order to persevere."