TEXT OF COMMENTARY

TESS VIGELAND: The dollar gained ground against other major currencies today after a better-than-expected report on private-sector job growth here in the U.S. But it has been a tough year for the greenback. So tough, in fact, that Republican presidential candidate Ron Paul has suggested a return to the gold standard. Commentator David Frum says that’s a really bad idea.

DAVID FRUM: With anti-Federal Reserve crusader Ron Paul polling almost 10 percent among New Hampshire Republicans, a once-zany question has taken on some spasms of life. Should the United States return to the gold standard?

For most of the period from 1789 to 1933, the dollar was fixed to gold. Twenty bucks to the ounce. If something positive or negative happened in the U.S. economy, the dollar could not adjust up or down the way it does today against the euro, the yen or the pound. A recession was like a car accident without bumpers or crumple zones — riders in the cabin felt the pain full-on. Domestic asset values collapsed. Unemployment jumped. Homes were lost. Businesses disappeared.

Since ending dollar-gold convertibility in 1933, the United States economy has experienced ever fewer and shallower recessions. Since 1982, we have enjoyed a quarter century of almost uninterrupted growth with low inflation.

Now, though, the United States is in the midst of a huge rebalancing of its external accounts. The dollar is declining. As the dollar buys less abroad, Americans will be constrained to consume fewer foreign goods and services, and foreigners will be induced to buy more from Americans.

With luck, this process will occur without a recession. This is what happened in 1985-86, the last such rebalancing.

There are three things one would want a monetary policy to do. You can do any two of these three things, but never all three at once. You can keep the domestic purchasing power of money stable. Or, you can keep your currency stable relative to other currencies. Or, you can allow money to flow freely across borders.

Today we choose domestic price stability plus capital freedom. That still seems the right choice.

But there other choices, including the old-fashioned choice favored by Dr. Paul — the one that says that when it’s time for an economy to make an adjustment, the adjustment should be felt good and hard.

VIGELAND: David Frum worked as a speechwriter for President Bush. He’s now a resident fellow at the American Enterprise Institute.