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New York Times starts pounding away at gold standard's revival

Section: Daily Dispatches

The dangerous old idea of limited and accountable government must be gaining ground.

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The Good Old Days of the Gold Standard? Not Really, Historians Say

By Binyamin Appelbaum
The New York Times
Tuesday, December 1, 2015

WASHINGTON -- Republicans unhappy with the Federal Reserve are circulating an idea that long ago lost currency with most economists: a gold standard.

In an election season shaken by terrorism fears, immigration politics, and economic anxiety, a shiny precious metal might seem like an odd fixation, but Senator Ted Cruz of Texas, a Republican presidential hopeful, said recently that the dollar should have a fixed value in gold, and some rivals for the Republican nomination said a return to the old standard was worth studying.

The rhetoric is rooted in concern that the Fed's efforts to revive economic growth have loosened its hold on inflation. A gold standard, proponents argue, would limit the Fed's ability to create money, thus ensuring prices remain stable.

But economic historians describe this as nostalgia for a time that never was. Proponents of the gold standard generally overstate the benefits of putting golden handcuffs on a central bank, historians say, and the costs of that reduced flexibility are considerable. ...

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