Good Planet Money piece on both sides of the gold standard
I found this interesting, and for anyone who looks at it's appearance in the perennial economics threads, it presents both sides with solid arguments for their positions.
Because gold is scarce, the gold standard keeps governments honest, Grant said.
If you're not on the gold standard, the government can print as much money as it wants. That can cause inflation: The more dollars that are out there, the less each dollar is worth.
On the gold standard, money isn't something you can just create out of nowhere. It's something physical. Constant.
It's only relatively recently that we adopted our current system — the system in which our central bank, the Federal Reserve, gets to decide how much money should be out there.
Parker told us the gold standard
...is a pernicious anachronism that should be kept in the history books. And to think that modern people today want to speak about its resurrection should absolutely horrify and terrify anyone who understands economics even a little bit.
The reason the gold standard should horrify you, Parker says, is that in a financial crisis, like the one we just went through, it can make things worse. In fact, most economists agree that the gold standard was one of the causes of the Great Depression.
Parker says when you're in a situation like the Great Depression, what the Fed needs to do is put more money out into the economy to get things going again — to make it easier for businesses to borrow money and hire people. But if you're on the gold standard you can't do that. There's only so much gold in the world. That means there's only so much money.