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Krugman and the Gold Standard

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According to Paul Krugman, it was adherence to the Gold Standard that helped push the United States into depression in the 1930s. What I find interesting, however, is the mentality he exposes about himself as he presents his case for wild inflation:

What E&T (Eichengreen and Temin) show is that circa 1930 key decision-makers had spent so many years equating adherence to gold not just with prosperity, but with morality, decency, civilization itself, that they couldn’t even contemplate breaking with that orthodoxy — even in the face of total catastrophe.

I think we’re more flexible now.

Yeah, breaking contracts, debasing the dollar, all that stuff that is associated with honesty and integrity. It is not difficult to see why Krugman would scorn such things.

Bill Anderson is a professor of economics at Frostburg State University in Frostburg, Maryland.

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