The most controversial questions posed to Fed Chairman Ben Bernanke at his lecture to George Washington University students today focused on one topic: gold.

While acknowledging the long history of the gold standard and its importance in the development of central banking, Ben Bernanke made crystal clear that we're never going back to the gold standard.

He explained that the argument supporting the gold standard has two parts: 1) the "desire to maintain the value of the dollar"—implying a "desire to have very low price stability, and 2) an aversion to allowing "the central bank to respond with monetary policy to booms and busts," explaining that "the advocates of the gold standard don't want to give the central bank that power."

But regardless of the impetus for these arguments, he explains, a return to the gold standard now "would not be practical for monetary reasons or policy reasons":

Bernanke pointed out various reasons that there's simply "not enough gold" to sustain today's global economy. First, extracting gold from the ground is a costly and uncertain endeavor. There is a limited amount of gold in the world, and it just doesn't make sense in the modern world for central or commercial banks store large amounts of gold in vaults. The size of the gold supply and inconvenience of the metal renders it too impractical to keep up with the pace of global commerce.

Second, while advocates of the gold standard are right that prices remain stable in the long-term, "on a year to year basis, that's not true." Limited supplies of gold—or changes to the supply of gold—cause prices of goods to be volatile in the short-term, regardless of long-term price stability.

In a rebuttal to the second part of that argument, Bernanke explained, "the commitment to the gold standard is that no matter how bad [the economy gets] we're going to stick to the gold standard."

He pointed to a substantial tome of economic research finding that the gold standard aggravated the Great Depression, saying "the gold standard was one of the main reasons the Great Depression was so bad and so long." The inability of the Federal Reserve to control monetary policy—open up credit, address unemployment, and drive business demand—left it with much less power to avert or mitigate the decade-long crisis. Bernanke added that countries not tied to the gold standard also had a much easier time getting out of the Depression. In the modern world, he said, "we've seen that problem with various kinds of fixed exchange rates."

Ultimately, he concluded that the gold standard hasn't really worked since the end of WWI. "Economic historians argue that after World War I the labor movements became much stronger," so we consequently saw, "much more attention to employment and business cycles." That prevents our economies from suffering exaggerated boom and bust cycles, and allowed the Fed to mitigate the effects of the recent financial crisis.

Sorry, Ron Paul. We think Bernanke just destroyed your position.