Mythbusting the gold standard
George Selgin of The Cato Institute wants to clear up some of the misconceptions about the gold standard.
The think tank’s senior fellow and director of its Center for Monetary and Financial Alternatives is not going after gold bugs (who have been a popular target for derision from economists).
Rather Selgin wants to point out “the errors many economists commit in their eagerness to find fault with that ‘barbarous relic’.”
All of them worth a read:
- The Gold Standard wasn’t an instance of government price fixing. Not traditionally, anyway.
- A gold standard isn’t particularly expensive. In fact, fiat money tends to cost more.
- Gold supply “shocks” weren’t particularly shocking.
- The deflation that the gold standard permitted wasn’t such a bad thing.
- It wasn’t to blame for 19th-century American financial crises.
- On the whole, the classical gold standard worked remarkably well (while it lasted).
- It didn’t have to be “managed” by central bankers.
- In fact, central banking tends to throw a wrench in the works.
- “The “Gold Standard” wasn’t to blame for the Great Depression.
- It didn’t manage money according to any economists’ theoretical ideal. But neither has any fiat-money-issuing central bank.