No, we shouldn’t go back to the gold standard

gold coins

Source: Flikr Creative Commons

I usually wake up to the sound of NPR’s Morning Edition. Today, I got a rude awakening hearing the story, “Trump Favors Returning To The Gold Standard, Few Economists Agree.”  Jim Zarroli does a nice job presenting the issue in a calm, “on the one hand, on the other hand” manner.

I’ll be more blunt: going back to the gold standard is a terrible idea.  I wrote about this three years and three days ago in a MinnPost column, “What if we dumped the Fed and returned to the gold standard?

Donald Trump, and earlier, Ted Cruz, seem to be attracted to the idea that a gold standard would provide some sort of anchor for the value of the dollar.  But this hardly seems like a problem in an era of extremely low inflation such as the one we are in today.

I’ve always found it ironic that those who seem most suspicious of government intervention in markets propose that governments fix the price of gold and stand willing to buy and sell whatever amount of gold is necessary to keep that price in place. This would be a far bigger undertaking than any agricultural price-support program or rent-control law, yet some conservative politicians embrace a gold standard without seeming to see this.