> Suppose we all switch immediately to a gold standard. When the value of the currency rises too high, more people will go and mine it. An interesting twist on

> Suppose we all switch immediately to a gold standard. When the value of the currency rises too high, more people will go and mine it. An interesting twist on the basic problem with fixed-price gold standards but you might be right for countries that have gold in the ground outside of controlled mines. But a fixed-price gold standard is a big fail no matter what price is set and subsequently has to be defended by the central bank. It worked "somewhat, sub-optimally, for a while" in the old days of a handful of developed slower-non-realtime economies that could coordinate policy and had the rest of the world colonized, today, no chance. Central bankers will never again go for it because they have learned that politics and private banking will always screw with the money supply for short-term objectives.. and no matter what fixed gold price you set, before long there'll always be a run on your gold. Better to mark reserves to market (as France has pioneered in the 70s and the ECB and others do today), so you don't need to constantly defend or redefine your fixed price, can manage the currency supply based on both long-term mandates and short-term needs and have its performance evaluated in gold and/or other currencies by the market forces, too. "Any nation/state can put its economy/currency on a gold standard. They only have two requirements. Own a stockpile of gold and raise the price very high" ;) It's funny that the "free-market advocates" these days favour a government-controlled fixed gold price, which they call "the return to an honest gold standard". Right now we have an "almost free-market gold price" in "almost free-FX-market floating (competing!) currencies". Not quite there yet according to some pundits but that's where the world is heading and has ever since the Nixon shock. Definitely a pretty impressive move that has emerged toward a "free market in moneys", what's not to like! ;)