Federal Reserve Chairman Jerome Powell told Congress on Wednesday that he doesn’t think a return to the gold standard in the U.S. would be a good idea.
“You’ve assigned us the job of two direct, real economy objectives: maximum employment, stable prices. If you assigned us [to] stabilize the dollar price of gold, monetary policy could do that, but the other things would fluctuate, and we wouldn’t care,” Powell said from Capitol Hill. “We wouldn’t care if unemployment went up or down. That wouldn’t be our job anymore.”
“There have been plenty of times in fairly recent history where the price of gold has sent a signal that would be quite negative for either of those goals,” he said. “No other country uses it,” he added. The Fed is tasked and overseen by Congress to maximize employment and keep prices stable.
Though Powell was quick to distance himself from the Fed nomination process, his comments on the gold standard put him at odds with the writings of Judy Shelton, a current Fed nominee and advocate for monetary policy reforms.
Shelton, who was tapped last week by President Donald Trump to join the Fed’s board, has written that a return to the gold standard affords the U.S. “an opportunity to secure continued prominence in global monetary affairs.”
“If the appeal of cryptocurrencies is their capacity to provide a common currency, and to maintain a uniform value for every issued unit, we need only consult historical experience to ascertain that these same qualities were achieved through the classical international gold standard,” she wrote in 2018.
The U.S. first severed the dollar from gold during the Great Depression of the 1930s, when then-president Franklin Roosevelt cut the greenback’s ties with gold, allowing the government to issue more money and lower interest rates. The U.S. allowed foreign governments to trade dollars for gold until President Richard Nixon abolished the policy in 1971.