The Republican Party plans to call for the creation of a commission that would explore the return of the gold standard, or tying the value of the U.S. dollar to the price of gold, the Financial Times reported on Thursday.
Paul Krugman thinks that is "an almost comically (and cosmically) bad idea."
The Nobel Prize-winning Princeton economics professor and New York Times columnist wrote in a Sunday blog post that a return to the gold standard would lay waste to an already struggling U.S. economy.
"Under the gold standard America had no major financial panics other than in 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933," Krugman wrote. "Oh, wait."
Rep. Ron Paul (R-Tex.) has long called for a return to the gold standard, and his ideas are becoming more mainstream within the Republican Party. Paul Ryan, the Republican Party's vice presidential candidate, supports a similar idea: tying the value of the U.S. dollar to a basket of commodities, in the name of price stability.
Yet economists have argued and history has shown that the gold standard could put more people out of work, hurt workers' wages, cause global instability and precipitate a financial crisis.
The gold standard played a direct role in causing the Great Depression, which was marked by deflation and an unemployment rate of more than 25 percent. And returning to the gold standard would erase the U.S. dollar's credibility and increase the risk of a trade war with other superpowers, according to Reuters.
Check out some more Krugman lines here: