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Stephen Foley: Bernanke back to basics with gold standard battle

 

Stephen Foley
Saturday 24 March 2012 01:00 GMT
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US Outlook Of all the moves that Ben Bernanke has made to protect the legitimacy of the Federal Reserve during a period of intense attack, from a back-to-my-roots interview on 60 Minutes to regular press conferences after interest rate meetings, his decision to go back to the classroom this week is his masterstroke.

He is doing a lecture series on the origins, the mission and the recent actions of the Fed at George Washington University, and it only took until the second student question to see why he needed to be there.

The question, a soft ball, admittedly, was on the gold standard, asking why the arguments in favour of a return to gold continued to beheard today.

Despite the historical carnage wrought by the gold standard, and the fact that it would disastrously crimp monetary authorities' ability to respond to shocks and slowdowns, the pseudo-intellectual advocates of a return to this brutal world have been massing on the internet and on university campuses. Ron Paul, the gold-bug presidential candidate, often leads students in a chant of "End the Fed".

The Fed chairman cast his return to lecturing as a cuddly piece of nostalgia. Actually, he was heading into the lions' den to press his case, academic argument for academic argument.

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