George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at the University of California at Berkeley
Con to the question "Should the United States Return to a Gold Standard?"
"GOLD IS back, what with libertarians the country over looking to force the government out of the business of monetary-policy making. How? Well, by bringing back the gold standard of course...
Envisioning a statute requiring the Federal Reserve to redeem its notes for fixed amounts of specie [gold] is easy, but deciding what that fixed amount should be is hard. Set the price too high and there will be large amounts of gold-backed currency chasing limited supplies of goods and services. The new gold standard will then become an engine of precisely the inflation that its proponents abhor. But set the price too low, and the result will be deflation, which is not exactly a healthy state for an economy...
Proponents of the gold standard thus face a Goldilocks problem: the porridge must be neither too hot nor too cold but just right. What temperature exactly, pray tell, might that be? And even if we are lucky enough to get it right at the outset, consider what happens subsequently. As the economy grows, the price level will have to fall. The same amount of gold-backed currency has to support a growing volume of transactions, something it can do only if the prices are lower, unless the supply of new gold by the mining industry magically rises at the same rate as the output of other goods and services. If not, prices go down, and real interest rates become higher. Investment becomes more expensive, rendering job creation more difficult all over again.
Under a true gold standard, moreover, the Fed would have little ability to act as a lender of last resort to the banking and financial system. The kind of liquidity injections it made to prevent the financial system from collapsing in the autumn of 2008 would become impossible because it could provide additional credit only if it somehow came into possession of additional gold. Given the fragility of banks and financial markets, this would seem a recipe for disaster. Its proponents paint the gold standard as a guarantee of financial stability; in practice, it would be precisely the opposite."
"A Critique of Pure Gold," nationalintrest.org, Sep.-Oct. 2011
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:
George C. Pardee and Helen N. Pardee Professor of Economics and Political Science, University of California at Berkeley, 1999-present
Chair, Academic Advisory Committee, Peterson Institute of International Economics
Fellow, American Academy of Arts and Sciences, 1997-present
Research Associate, National Bureau of Economic Research, 1986-present
Research Fellow, Centre for Economic Policy Research, 1984-present
Recipient, Distinguished Teaching Award, University of California at Berkeley Social Science Division, 2004
Recipient, Jonathan R.T. Hughes Prize for Excellence in Teaching, Economic History Association, 2002
John L. Simpson Professor of Economics and Professor of Political Science, University of California at Berkeley, 1994-1999
Senior Policy Advisor, International Monetary Fund, 1997-1998
Professor of Economics, University of California at Berkeley, 1986-1994
Faculty Research Fellow, National Bureau of Economic Research, 1981-1986
Assistant and Associate Professor of Economics, Harvard University, 1980-1986
Former Guggenheim and Fulbright Fellow
Former Fellow, Center for Advanced Study in the Behavioral Sciences