The Ben Bites Back
Bernanke has been slashing back at Ron Paul and proponents of a gold standard. He says a gold standard handicaps the government's ability to address economic conditions. Link. The left-wing Atlantic loves it, saying Bernanke is "schooling" his opponents (the colloquial term has two meanings: (1) imparting knowledge; (2) dominating opponents--you can guess which one the Atlantic means).
The problem is, the arguments Bernanke is (apparently) spouting are vapid. He's saying the gold standard after WWI didn't work that well. He's right, but the post-WWI "gold standard" wasn't really a gold standard at all. He says it ties government's hands to address crises. Sure, but who causes the crises in the first place (that debate could rage for a few more centuries and cuts to the heart of the argument: are markets more efficient than governments?).
I do, however, tend to agree with Fed expert Allan Meltzer, who says a gold standard is a good idea, as long as the rest of the world gets on board, too. Otherwise, gold would flow out of our country faster than herpes out of a sorority girl. I'm not sure I see a way around that problem, so for now, a gold standard is a pipe dream.
