Hi,

I posted the above question about the suitability of adoping a 'Gold Standard' on YouTube, in response to a 1983 video about Ron Paul, where he is advocating the Gold standard, as he is doing until this day.

these are the response I got

"I do not think that elasticity as you describe it is 100% necessary for growth. Certainly the economy in the US grew during the years there were a gold standard. If the economy is growing and the currency is static, then the currency's purchasing power will increase as total goods + services increase, right?

In a "controlled" economy based on credit, deflation is scary (see housing bubble). However, if a currency is stable, then downward price fluctuation isn't as big a problem."

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"...as for gold keeping pace with growth, it will become more valuable as we require more for exchange, so it will be more profitable to mine.

But the finite amount of gold available is not a problem. That's why it's so useful in the first place. As it's purchasing power increases, prices will fall and/or people will trade in smaller denominations. As such you can never "run out" of it. It's utility is not lost by greater demand; it just buys more stuff, so you use smaller denominations"


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"The gold standard was in place during late 19th century as the video states. During this time was one of the greatest economic periods of the country. That should be evidence enough, but growth is not a result of more money, but more material wealth in the form of goods/services. The more production of these real wealth assets, the more valuable the money in existence becomes so prices will go down and saving your earnings makes sense. With fiat money, the value of your savings/labor goes down"


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In response to the argument that Gold standard will have deflationary impact on the economy - I have the following question

How is gold different from oil? Wouldn't adopting the Gold standard, mean that a country, with absolutely no economy, but LOTs of gold, will suddenly become rich! they can just import all the goods and services, like some of the developed middle eastern countries do, based on their oil deposits?


any response or discussion is much appreciated

thank you