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First, ordinary people usually recognize that high inflation is sign of monetary instability, but forget the same holds about deflations. Second, it is widely believed by economists that over the business cycle it is good if economy has moderate inflation rather than deflation (again see any conventional macro textbook such as the Mankiw or Blanchard et al recommended above).

First, even non-economists usually recognize that high inflation is sign of monetary instability, but forget the same holds about deflations. Second, it is widely believed by economists that over the business cycle it is good if economy has moderate inflation rather than deflation (again see any conventional macro textbook such as the Mankiw or Blanchard et al recommended above).

Of course there is an option of not accommodating the asymmetric macroeconomic shocks but that leads to worse recessions, higher unemployment and general economic malaise that you could observe in EMU which is again a paper equivalent of gold standard. Hence, it is very inefficient to have gold standard system that is followed by multiple independent countries.

Of course there is an option of not accommodating the asymmetric macroeconomic shocks but that leads to worse recessions, higher unemployment and general economic malaise that you could observe in EMU (which is again a paper equivalent of gold standard) after Great Recession. Hence, it is very inefficient to have gold standard system that is followed by multiple independent countries.

5. Gold standard wastes scarce resources. Under gold standard gold - a scarce resource with many industrial uses - is literally dug from the ground just to be buried under the ground again in bank vault. There is simply no reason to waste scarce resources in such way when you can base currency on paper or heck nowadays even just electronically. Obviously, Bitcoin would not have this problem, but the reason why I asserted it would be even worse is that it would have more constraints on monetary policy (this point 4 while significant pales in comparison with economic importance of points 1-4).

5. Gold standard tended to be deflationary.

First, ordinary people usually recognize that high inflation is sign of monetary instability, but forget the same holds about deflations. Second, it is widely believed by economists that over the business cycle it is good if economy has moderate inflation rather than deflation (again see any conventional macro textbook such as the Mankiw or Blanchard et al recommended above).

This is due to existence of nominal rigidities in the economy (e.g. nominal contracts are set for specific duration of time; minimum wages; menu costs - that is costs of changing prices frequently, even psychological reasons and so on). Such rigidities make it beneficial for economy to have small amount of inflation over time which relaxes them which is especially important during economic downturns when real decreases in wages and increase in prices, but it is simply too difficult for people to adjust prices and renegotiate wages quickly enough.

6. Gold standard wastes scarce resources. Under gold standard gold - a scarce resource with many industrial uses - is literally dug from the ground just to be buried under the ground again in bank vault. There is simply no reason to waste scarce resources in such way when you can base currency on paper or heck nowadays even just electronically. Obviously, Bitcoin would not have this problem, but the reason why I asserted it would be even worse is that it would have more constraints on monetary policy (this point 4 while significant pales in comparison with economic importance of points 1-5).