Krugman says it looks like the Republicans will include a plank advocating a return to the gold standard in their platform. I can think of a number of reasons they would include something that freakin’ crazy: First, and most important, to attract as many Ron Paul supporters as possible; second, Ayn Rand fanboys (I mention no names!) will love the idea; and third, they would love to shut down the ability of the government to print stimulus money.
Brilliant plan! What could possibly go wrong?
But seriously, it appears that a push for a return to the gold standard — theGolden Fetters that played such a large role in propagating the Great Depression — is going to be part of the Republican platform.
Bear in mind that the incessant warnings of runaway inflation from the expansion of the Fed’s balance sheet have been wrong, wrong, wrong; and that exchange rate flexibility has been crucial to most of the success stories of this crisis, from Poland to Sweden to Iceland. Nonetheless, the GOP is convinced that what we need to do is base future monetary policy on a doctrine that has totally failed in recent years. After all, Francisco d’Anconia says that it’s the only way.
A return to the gold standard would make business cycles