International monetary policy with commodity buffer stocks

Abstract

This proposal argues in favor of commodity price stabilization via international commodity buffer stocks and the tying of these stocks to the creation of a new international reserve currency. Financing commodity buffer stocks through the issuance of an international reserve makes commodity price stabilization financially viable and offers a countercyclical issuance of international reserves to fight global deflation. Both measures address the volatility of commodity prices due to a lack of private sector storage and macroeconomic demand factors. This proposal urges the reader to look back to the global Keynesian policies of the 1940s, 1960s, and 1970s for inspiration in solving today’s commodity price instability and secular stagnation.