Hi Ron,
A gold standard by default limits the expansion of the money supply as there is only so much gold available.
There is ALWAYS enough gold to set any standard one wishes, including 100% backing. Of course, barring adequate new supply or excessive money creation, gold is subject to continual re-pricing in fiat terms, ever higher. But that's the whole point of gold-backing in the first place.
Taken together with silver (bi-metallism), I submit that adequate new supply is NOT the problem. Annual gold production is a couple percent of existing stocks, about the same as annual global growth. However, annual global money creation is far in excess of the underlying growth rate.
This glaring "flaw" in the system provides benefits to but a few. Instead, the general level of distress includes gross, unproductive currency speculation, unknown mountains of leveraged derivative positions, and inflated, volatile equity markets trading without the merest threads of fundamental reality. |
