Bernanke the Professor Debunks the Gold Standard - NYTimes.com: Mr. Bernanke spoke Tuesday about the history of monetary policy in the United States, including the Fed’s creation in 1913, and its role in causing the Great Depression. He framed much of this history as a critique of the gold standard, which was dropped in the early 1930s in a decision that mainstream economists regard as obviously correct, hugely beneficial and essentially irreversible.
Congressman Ron Paul, a Texas Republican who is running for president, has won a loyal following, including among college students, for his campaign to restore a gold standard. In such a system, the availability of money is determined largely by formula — in proportion to the availability of gold — rather than the discretion of policy makers.
Mr. Bernanke has treated this advocacy as obviously misguided, generally declining to engage with Mr. Paul at Congressional hearings. But the Fed’s longstanding practice of ignoring most critics most of the time has not served it well in recent years, as its aggressive policies have made it the subject of public scrutiny.
So on Tuesday, in careful and simple language, Mr. Bernanke took the time to explain his opposition to the gold standard.