Timeline for What were the problems with the gold standard?
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12 events
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| Feb 19, 2021 at 21:07 | comment | added | Daniel | Point taken, but I assume that a return to the gold standard would require 100% backing of the monetary base, otherwise you get a run on the (central) bank like we had in the early 1970s and the system collapses. | |
| Feb 19, 2021 at 15:37 | comment | added | Bertrand Einstein IV | @Daniel I think that misses the entire point of having a Gold Standard. The entire idea of "setting the price" is antithetical to a commodity based currency. If you study the Bretton Woods system (what everyone used prior to Nixon), it did not require every dollar to be accounted for by gold; it's actually quite subtle/nuanced. Plus one of the main goals of reinstating the gold standard would be to shrink the U.S. Monetary Base. Again I'm not making an argument for or against; this is just what the so called "gold bugs" would say | |
| Feb 17, 2021 at 22:58 | vote | accept | Mr. Spock | ||
| Feb 17, 2021 at 17:11 | comment | added | Daniel | I also wonder how many of the 'gold bugs' (people who really want a gold standard) are doing so for personal gain since they own gold. Last time I checked, the U.S. monetary base was several times larger than U.S. government gold holdings. So switching to a gold standard would require setting a price of gold several times higher than the current value. | |
| Feb 17, 2021 at 9:48 | comment | added | 1muflon1♦ | @BertrandEinsteinIV it’s not true that is just under New Keynesian view. In neoclassical, monetarist etc models that holds as well. I don’t think there are any supporters of gold standard within modern conventional economics no matter into what category taxonomically their models fall in. I am sure there might be some heterodox economists wanting gold standard but you would not find mainstream one and current mainstream is very broad (de jure it is Neoclassical synthesis but de facto it is synthesis of anything that gets supported by empirical evidence - eg including behavioral econ etc) | |
| Feb 17, 2021 at 3:10 | comment | added | Bertrand Einstein IV | Very good answer; but I think some of the 'failures' you point out particularly point 2 and 4 are only failures with a Neo-Keynsean view of the relatioship of Fiscal Policy and Central Banks. Defenders of the Gold Standard would actually consider them features. I am not making a diffinitive point or argument; just stating that these effects of the Gold Standard you pointed out (which are undoubtedly true), are not necessarily failures depending on who you ask. | |
| Feb 16, 2021 at 18:12 | history | edited | 1muflon1♦ | CC BY-SA 4.0 |
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| Feb 16, 2021 at 17:57 | history | edited | 1muflon1♦ | CC BY-SA 4.0 |
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| Feb 16, 2021 at 16:52 | history | edited | 1muflon1♦ | CC BY-SA 4.0 |
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| Feb 16, 2021 at 16:45 | history | answered | 1muflon1♦ | CC BY-SA 4.0 |