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| In the fall of 2007, when the U.S. economy first seemed in peril, I began answering reader queries here on the Business Desk. I still do so, but this page has expanded to include posts from eminent economists, "far-flung correspondents," and a variety of voices that have intriguing and/or useful things to say about economics, broadly defined. Please feel encouraged to respond to any and all of them. |
« Previous Entry | Main | Next Entry » Why Is the Gold Standard a Bad Idea? 
Name:
K. Ponganis
Question: Why is the gold standard such a bad idea? I know it is a discredited system, but having never studied economics, I don't understand why. Right now, is our money just some arbitrary amount issued by the Federal Reserve? BTW, your PBS pieces are always my favorite part of The NewsHour. Paul Solman: Because a gold standard - paper money that must be redeemable for actual gold - means you can't print any more money than you have of the hard stuff. We want the economy to grow, right? That means more goods and services produced next year than this. But now suppose we can't find or produce any more gold, so the money supply has to remain constant. How will we pay for the added goods and services? We'll be short of money. Which means the producers will eventually say, 'The hell with it' - and stop producing more. And so the economy won't grow after all. -- Posted April 30, 2009 | Comments ( ) | Permalink
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