President Donald Trump has declared that a return to the gold standard “would be very hard to do, but but boy would it be wonderful.”
Students in economics schools are taught that a return to the gold standard, which was abandoned by the U.S. in 1971, would not be a good fiscal move for the United States. But Trump and many others disagree.
In an interview with GQ, President Trump said “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.”
Trump loves gold
Trump’s enthusiasm for gold stretches back into the 1970s. He became an aggressive investor in the precious metal when the U.S. legalized private ownership of the gold in 1975.
Buying in at about $185 an ounce at the time, Trump noted that he sold his stake between $780 an ounce and $790 an ounce, calling the money-making investment ‘easier than the construction business.’”
Why the gold standard?
President Trump is not alone in his interest in returning the U.S. to the gold standard. Republicans including Ted Cruz, Mike Huckabee, and Ben Carson, have all declared some degree of support for the gold standard, with Cruz being the biggest supporter among these three.
There is also strong support for a return to the gold standard among members of the public. According to a 2015 poll from Gallup, 39% of respondents approved of the gold standard in the U.S., compared to just 15% who disapproved. Yes, that does mean 46% of respondents did not understand the question and answered as undecided, but it demonstrates strong favorability toward the gold standard based on those who understand the issue.
American consumers are simply growing weary of accelerating federal deficit levels and an outrageous $20 trillion in national debt. With the need to have gold on hand to exchange for dollars on an as-needed basis, the Federal Reserve’s ability to print money would be restrained, limiting the amount of debt that could be issued annually.
President Trump and many pundits believe that the gold standard would be America’s ticket to getting out of debt, or, at the very least, balancing the federal budget and holding the Federal Reserve to account.