Professor of Economics and International Affairs at Princeton University
Con to the question "Should the United States Return to a Gold Standard?"
"Say this for the GOP: by resurrecting the very bad, no good, truly awful idea of a gold standard, they’ve given us something to talk about...
[A]nyone who believes that the gold standard era was marked by price stability, or for that matter any kind of stability, just hasn’t looked at the evidence. The fact is that prices have been far more stable under that dangerous inflationist Ben Bernanke than they ever were when gold ruled.
I’d like to offer a different take. There is a remarkably widespread view that at least gold has had stable purchasing power. But nothing could be further from the truth...
[There is] a pretty clear (and economically understandable) relationship between the real price of gold and the real interest rate: when real rates are low, real gold prices are high.
And when are real rates low? High inflation can do that, as it did in the late 1970s; but so can a severe economic slump due to a deleveraging shock, as in recent years.
What does that tell us about how a gold standard would work? Faced with the kind of shock we’ve just experienced, the real price of gold would 'want' to rise. But under a gold standard, the nominal price of gold would be fixed, so the only way that could happen would be through a fall in the general price level: deflation.
So if we’d had a gold standard operating in this crisis, there would have been powerful deflationary forces at work; not exactly what the doctor ordered.
The truth is that returning to gold is an almost comically (and cosmically) bad idea."
"Golden Instability," krugman.blogs.nytimes.com, Aug. 26, 2012
Experts Individuals with PhDs, heads of government, members of federal legislative bodies, and individuals with graduate degrees and significant post-graduate involvement in fields relevant to the study of economics [Note: Experts definition varies by site.]
Involvement and Affiliations:
Professor of Economics and International Affairs, Princeton University, 2000-present
Op-Ed Columnist, New York Times, 1999-present
Centenary Professor, London School of Economics
Research Associate, National Bureau of Economic Research, 1979-present
Recipient, Nobel Memorial Prize in Economic Sciences, 2008
Fellow, American Academy of Arts and Sciences (AAAS), 1992
Staff Member, Council of Economic Advisers, Reagan White House, 1982-1983
Former Ford International Professor of Economics, Massachusetts Institute of Technology (MIT)
Former Professor, Yale University and Stanford University
Former President, Eastern Economic Association
Member, Group of Thirty (an international economic body)
PhD, Economics, Massachusetts Institute of Technology (MIT), 1977
BA, Economics, summa cum laude, Yale University, 1974