The American "gold standard" was actually a silver-gold peg, first set by Hamilton at 15 to 1. Bimetalism had problems of its own, see Gresham's Law.
And the US economy, with "dollar stability linked to gold" went through severe boom-bust cycles every decade or two, see, e.g., the Great Depressions of 1785-1786 (led to Shay's Rebellion) of 1837-1843 (almost caused the South to secede), the Long Depression of 1870s-1890's, the Depressions of Jan. 1920-July 1921, Aug. 1929-Mar. 1933.
Et cetera.
In the 20th century, economists have demonstrated that the "gold standard" (which, by the way, is managed by central banks) leads inexorably to deflation and instability. Robert Mundell hypothesizes that gold money without central bank management (such as existed from antiquity) could work, but nobody has tried it since the Middle Ages. The problem is that people have to go to barter because there isn't enough gold to go around. Terrible for business.
I hate it when people talk about history without bothering to learn it. Undercuts their point and confuses the issue. |
