Rep. John Duncan, Jr. (R-TN) appeared on the Mike Church Show last Monday to discuss a range of economic topics, including monetary policy. Midway through the interview, Church blamed our “fiscal malaise” on the Federal Reserve and asked Duncan, “Wouldn’t it be prudent for Republicans to gently begin urging their citizens to return to gold?” “I agree with you completely,” the Tennessee congressman replied:
CHURCH: For the first time since 1996, the term gold standard was actually mentioned in the RNC platform. Gov. Romney made hardly any mention of it whatsoever. Isn’t the fiscal cliff and our fiscal malaise at least partly to blame on the federal reserve and our reckless monetary policy? Wouldn’t it be prudent for Republicans to gently begin urging their citizens to return to gold?
DUNCAN: Yes, I agree with you completely. [...] The best way to protect our money and keep us from facing things like I mentioned a few minutes ago like our pensions and so forth becoming almost worthless is to return to a gold standard or non-inflationary policies.
Beyond the irresponsibility of such a statement, Duncan’s desire to tie our economy to a rock is nonsensical. Those advocating for a return to the gold standard justify it with fear of runaway inflation, but inflation rates are currently at historic lows.
The main problem with the gold standard, though, is that it’s never worked. It would wreak havoc on the both the U.S. and worldwide economy. There isn’t enough gold in existence. And basing currency on a rock is no less arbitrary than an agreed-upon piece of paper. The idea is so far out there, in fact, that even conservative economic hero Milton Friedman opposed it.