Yeah... No, that's not gonna happen.

Their observations are correct - Bitcoin volatility is basically caused by a fact that the "producer" has very limited ability to exercise arbitrage (both of the problems they point out amount to essentially the same). Here is another article on the subject:

Bitcoin, Gold, and the Quantity of Money

Basically, price volatility inherently follows from Bitcoin's properties and there is really no way to resolve it.

However, their proposed "fix" is complete nonsense. Another bunch of Keynesian economists, sigh...

Amateur comment.
Darkcoin or litecoin for that matter are not better than Bitcoin by any means.

A dollar-pegged bitcoin?  What's next?  A horse-drawn automobile?

The method will change the Bitcoin's principle which is dependent and decentralized. Yes, it just temporarily stabilizes the price to fiat, but due to high inflation of dollar and scarcity of bitcoin, there will be contradiction between them.

They don't seem to understand bitcoin at all. This is demand side Keynesian hogwash that has worked oh so well in fiat economies

Meanwhile the Yen is turning into confetti, oh the irony.

Yeah that would just make bitcoin like all the other fiat currencies that are already around, bitcoin would be just an online currency. This would be more then a step back. It sounds to me like they don't understand fundamentals behind bitcoin.