Whatever the merits of the gold standard, I don’t see it happening in the next five years. Where is the political will? Ron Paul remains steady in the polls, even surging a bit lately, but still a long ways from the White House. And unless I’m mistaken, Paul is the only serious contender for the 2012 GOP nomination who agrees that a return to gold is a good idea.
Even if Paul were to be elected, would he find the political backing for such a move? Could he return us to gold with the stroke of a pen? I doubt it. I like Ron Paul, and I like his stance on foreign policy especially, but even there he would be severely hampered by political realities.
I can understand the idea that regulatory and monetary certainty is important, that a stable currency is good for the free flow of capital. But is it sufficient for economic recovery? For job creation?
Austerity is very good in boom times, but I am less certain of its value in the midst of a recession – especially a recession defined by a toxic combination of bad balance sheets, low consumer demand and spending, and very real structural shifts in the job market thanks to technological changes that are rapidly realigning the economy.
This is why I’ve argued for an unblanced-budget amendment, which would trigger austerity out of a recession and increased spending during, leading to balanced budgets in good times and reserves to push us through bad times.
Fundamentally, though, I’m just not certain economics as a field is up to the task of judging the current landscape of the crisis. Technology, the advent of a ‘free’ economy, and the rapid gains made in the developing world all throw various wrenches into old ways of looking at the world.
But all that aside and regardless of its merits, I don’t see a return to the gold standard as any more likely than a transformation of politics. At least any time soon.
E. D. Kain-Forbes.com-November 16, 2001