Trump Favors Returning To The Gold Standard, Few Economists Agree

Jun 16, 2016
Originally published on June 16, 2016 7:57 pm
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STEVE INSKEEP, HOST:

Here's a little-noticed economic idea of Donald Trump - the Republican presidential candidate likes gold.

RENEE MONTAGNE, HOST:

He's used a lot of it in decorating his real estate properties, like Trump Tower. His financial statement says he owns up to $200,000 in gold.

INSKEEP: And Trump recently told the website thescene.com that he would like to return U.S. currency to the gold standard. NPR's Jim Zarroli reports.

JIM ZARROLI, BYLINE: Trump said he wants to see the United States do something it hasn't done since the Great Depression - tie the value of the dollar to the price of gold.

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DONALD TRUMP: 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.

ZARROLI: Returning to the gold standard is an idea that's popular with a small segment of voters, many of them Republicans. Texas Senator Ted Cruz was a proponent. Kentucky Senator Rand Paul said the idea should be studied. But economist Dean Baker of the Center for Economic and Policy Research says it's something of a fringe idea.

DEAN BAKER: You'll find very few economists that studied the issue who can look back at the history and why countries moved away from the gold standard who would say, that was a mistake, and somehow we need to get back to that.

ZARROLI: The idea behind the gold standard is to link the dollar to a precious metal and thus prevent the fed from printing too much money. Proponents say it will keep inflation under control. But Baker says inflation is hardly much of an issue right now.

BAKER: Our big problem the last five years has been inflation has been too low. And the analogy I make is this is like prescribing chemotherapy for someone who doesn't have cancer.

ZARROLI: In fact, Baker believes the gold standard would be a disaster during a recession. It would constrain the fed from stimulating the economy by adding to the money supply. Trump's campaign didn't return calls for comment, so it's not clear how serious he is about returning to the gold standard. He has talked about the idea once or twice before, but never at great length. Still, the idea remains popular with some of his voters, and Trump says it's an idea he likes. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.