One of the claims made against the gold standard is that there has been more stability since we adopted a paper standard than when we were under gold. The unmentioned: the problems have been papered over at the expense of our savings and the dollar’s purchasing power. There has been a trade-off at work here. The more recessions are papered over, the less our money is worth. It’s true that the data reveal crises under a gold standard, but their frequency shows the opposite of what it seems. It shows that the crises are self correcting--when the government lets them correct--and at no long-term cost to the currency’s value. What’s more, the root of the crises in the past has not been gold but rather deviations from it: guarantees, restrictions on convertibility, too-big-to-fail policies, price fixing between gold and silver, bailouts, and the like. You have to unpack the data to understand it.
