The Gold Standard Failed

The gold standard failed.

The reason for this failure has more to do with "standard" than with the word "gold."

"Standard" is a synonym of the word "regulated."

Using gold as the backing for a nation's currency leads directly to attempts to regulate the economy by manipulating the price of gold. These attempts to regulate economies through buying or selling of gold quickly slammed against harsh economic realities.

Fiat currencies allow extra room to manipulate the economy. If you can convince people that inflation is all well and normal, then the introduction of fiat currencies greatly expand the ability to manipulate the economy.

The history of fiat currencies is bleak, with a large number of deep recessions and currency failures. The extra room that fiat currencies give to manipulate the economy has not led to niravana.

The problem is clearly not the backing of the currency but the attempts to regulate the economy.

Proponents of the free market need to be wary of any discussion involving the term "gold standard." This term implies attempts to regulate the economy by governments and central banks holding large amounts of gold.

A free marketeer must start from the position that the price of all items fluctuate.

Advocates of the regulated economy will goad people into conversations about the gold standard and then start slapping you silly with evidence that shows attempts to regulate the price of gold systematically fail.

When a progressives successfully draw a goldbugs into defending the "gold standard," they manage to draw the goldbug into the corner inwhich the goldbug is forced to defend economic regulation.

The goldbug who understands the nature of this trap can take the data progressives use to attack the "gold standard" and show that it was the attempts to regulate gold that led to economic turmoil and not an inherent property of precious metals.