To What Extent is a Return to a Gold Standard a Desirable and Feasible Option for the United States of America?

Abstract

The purpose of this paper was to evaluate both the feasibility and desirability for the United States to return to a form of gold-backed currency, such as a gold standard. It was first necessary to provide a definition of a gold standard, as well as explain how one functions, before exploring some of the contemporary arguments as to why a return to a system such as this would be a good policy decision. The typical benefits that proponents of a gold standard cite are increased price stability, decreased inflation, and a decrease in the federal deficit through reduced spending. This investigation yielded the findings that not only do these benefits typically fail to materialize under a gold standard, but such a system can actually be detrimental to price stability in the consumer price index. Among other reasons explored that calls a gold standard’s feasibility into question, the consensus of eminent economists and journalists points to a political climate inhospitable to a return to a gold-backed currency. It is for these reasons that I conclude a return to a form of gold standard to be neither desirable nor feasible for the United States.