TRUMP’S FED PICKS REVIVE TALK OF GOLD STANDARD
President Donald J. Trump announced plans to nominate two gold standard advocates to sit on the Federal Reserve Board, reviving talk of once again pegging the value of the U.S. dollar to gold, a move the president himself has supported. Trump’s picks, economist Stephen Moore, a senior fellow at the Heritage Foundation, and Herman Cain, the former CEO of Godfather’s Pizza who weeks later withdrew from consideration because of failure to gain support in the Senate, have each blamed the central bank’s monetary policy for holding back the U.S. economy and argued for reducing the Fed’s power to influence the value of the U.S. dollar by tying the currency to gold.
Most recently, Stephen Moore has promoted tying the value of the dollar to a basket of commodities, including gold. “I think that a gold standard would certainly be better than we have right now, but I think there’s a much better system we could put in place, which would not just look at gold, but all commodities,” he said on CNN. “I think they’re a very good forward looking indicator for where prices are going.”
In a Wall Street Journal opinion essay, Moore said the Fed should raise interest rates when gold and other commodities are rising in price, and drop rates when commodities are declining.
Cain, had been particularly outspoken in favor of the gold standard, arguing in a Wall Street Journal opinion article the Fed has abused the government’s constitutional authority to regulate the value of money. “In Washington, regulate has meant manipulate, with the Federal Reserve raising and lowering interest rates and buying and selling assets at its own discretion. All of this manipulates the value of the dollar,” he wrote. Cain served as a director and as Chairman of the Federal Reserve Bank of Kansas City in the 1990s.
The vast majority of Wall Street and Washington economic policy experts remain skeptical of the gold standard, which effectively ended in 1971 when the U.S. halted its practice of buying U.S. dollars from foreign governments at the rate of $35 dollars for one ounce of gold.
But during the 2016 presidential campaign, Trump declared, “Bringing back the gold standard would be very hard to do, but, boy, would it be wonderful. We’d have a standard on which to base our money.” By nominating Cain and Moore, President Trump displayed his continued support for a return to the gold standard.
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