I was getting into a discussion with one of my cousin’s friends who happens to be an economist. I told him I was in favor of a gold standard and that the Fed inflates the money supply which hurts the poor the most. He told me that the gold standard led to unemployment because much of the gold was transfered outside the country. I was caught off guard since I never really heard that argument before. What do the propents of the gold standard have to say about this theory?
Gold was being transferred out of the country because the Fed was inflating the money supply.
Gold leaving the country doesn’t cause unemployment.
The Great Depression was 100% caused by the Federal Reserve. The gold standard was abandoned in 1913, when the Federal Reserve was created, and not in 1933, when president Roosevelt defaulted on the dollar and confiscated the gold.
Gold was leaving the country from 1913-1971. The Federal Reserve was printing more Federal Reserve Notes than physical gold was in the US treasury.
A gold standard is “bad” because it protects individuals from inflation. If governments print more paper than gold, then eventually there’s a default on their money. Paper money is “flexible”, because it allows individuals’ savings to be stolen by inflation.