Gold: Does it Provide a Viable Basis for the Monetary System?

Abstract

Prompted by the acceleration of inflation, the decline in real rates of economic growth, and the general rise in economic uncertainty that occurred during the decade of the 1970s, many people have begun to consider whether a revival of a monetary role for gold would offer a way out of our travail. Professor Robert Mundell of Columbia University has called for a return to gold convertibility (Wall Street Journal, 30 September, 1981), several bills have been submitted to Congress calling for a return to one variant or another of the gold standard by the United States, President Reagan has allegedly expressed a positive view on the issue, and a Gold Commission was established to examine the question.

This paper draws heavily on my longer and more fully documented paper, ‘The Gold Standard: Historical facts and Future Prospects’, Brookings Papers on Economic Activity, 1982, No. 11. References to most of the facts cited can be found in that paper.