The once-fringe fantasy of a return to the gold standard is creeping back into the mainstream....

The once-fringe fantasy of a return to the gold standard is creeping back into the mainstream. It has long been dismissed as a fool’s errand, on par with abandoning the Federal Reserve and other trappings of the modern economy. Mainstream economists deride it almost without exception. Reintroducing the gold standard would “be a disaster for any large advanced economy,” says the University of Chicago’s Anil Kashyap, who connects enthusiasm for it with “macroeconomic illiteracy.” His colleague, Nobel laureate Richard Thaler, struggles with its very underlying principle: “Why tie to gold? Why not 1982 Bordeaux?” (Quartz, July 2019) Briefly, why are economists cool to the idea of the US returning to the gold standard?

Expert Solution

Economists are cool to the idea of the US returning to the gold standard because there is renewed support for money backed by something tangible, not the say-so of the government. If inflation picks up once again, a solid base of gold standard evangelists is ready to take it mainstream.

Rahul Sunny answered 2 years ago

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