(Kitco News) – US Federal Reserve Chairman Jerome Powell has expressed concern over the US suggestion to join a new gold standard, telling Congress it was not a good idea.
His comments came after his renewed focus on a new gold standard after the nomination of one of his promoters as governor of the Federal Reserve.
While commenting on no potential candidate, Powell said in his semiannual testimony before the House Financial Services Committee that he did not think it would be wise to adopt a new gold standard. .
He explained that Congress should also act to ensure that the current mandate of the central bank is to support maximum unemployment and price stability.
He added that a gold standard would force the Federal Reserve to stabilize the price of gold in dollars.
"Then we would not look for maximum employment or stable prices. In fairly recent history, the price of gold has been repeatedly often sent to signals that would be rather negative for these purposes, "he said.
He added that the price of gold is not related to the real economy, such as employment and inflation.
"If you assigned us to stabilize the price of gold in dollars, monetary policy could do it, but other things would fluctuate," he said. "That's why every country in the world has abandoned the gold standard a few decades ago."
Last week, President Donald Trump proposed to Judy Shelton to sit on the board of directors of the US central bank, which pleaded for the US to return to the gold standard to create a "reliable reserve." value across borders and in time ".
"It is quite reasonable to ask whether this could be better secured by linking the supply of money and credit to gold or another benchmark, instead of relying on judgment. of a dozen monetary officials meeting eight times a year to set interest rates. , "She said in a commentary published in the Wall Street Journal on April 21.
– Judy Shelton (@judyshel) April 21, 2019
Powell's comments on his first day of testimony at Capitol Hill were positive for gold as prices rose above $ 1,400 an ounce after highlighting growing uncertainty over economic growth potential .
The latest gold futures of the month of August traded at $ 1,412.30 an ounce, up nearly 1% on the day.
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