A problem with the gold standard is that the gold would become too valuable so that it couldn’t be used for purposes like science, dental treatment, etc.
And sooner or later the price of gold would be so high that a bread would cost 1 gold atom! That would be problematic…
Right?
Exactly what scientific and dental purposes need gold?
Also, I don’t think that the gold standard will last indefinatly, assuming we don’t switch to gold or platnum (more acessable metals) and space can’t be used for mining purposes then you are right however.
Hahahahahahahahahahahahahahahahaha!
You’re funny.
Why? Ever heard of the small change problem.
Theoretically, “the market” (the consumer) will decide (through demand for money) what the best currency is (at least, locally). I believe that this would be a parallel metallic standard, unrestrained by the State (that is, without fixed exchange ratios and whatnot). This would allow the usage of coins of other metals, or materials, of lesser value, which are exchangeable with gold when accumulated.
WRONG!!!
Why is this so hard to understand? (I know the answer: The Pro-Central Bank Crowd is trying to hide the benefits of going to metal base money or better yet market determined money.) The gold standard does not mean that everyone must use gold or notes completely backed in gold. It means that fiat money would cease to exist and that banks would store reserves in gold or some other valuable metal and issue notes redeemable in gold or the other metal. Gold just happens to be universally accepted but there are other valuable metals: silver, copper, etc. Even without fractional reserve banking people would simply switch as they did in ancient times to different metals for different purposes. The Romans has gold, silver and copper coins.
The most free banking system to ever exist as far as we know was in Scottland from 1716 to 1845. The people used gold for large transactions and silver for smaller transactions. They also had paper money with reserve rates around 2 to 5%. So for every ounce of gold there were notes redeemable for 20 to 50 times that amount. There were fewer bank failures and reserves were safer EVEN with the low reserve rates than they are in todays fiat money system with 10% reserve rates under todays centrally planned banking system.
The Austrian perspective on the form of money is that the markets themselves will determine the form of the unit of exchange through the market process of discovery like it does for any other good. History has shown us that by far the most common but not only market choice for money has been a combination of the metals gold, silver and copper. People have used other things: cigaretts, salt, walter, whool, fancy paper as money as well.
Then silver, platinum, palladium, copper, or something else would become the medium of exchange.
on the market, currently, there are items that trade for 1cent. also, there are many items that can be procured for less than a cent.
how is that possible?
think about how many pieces of paper can be bought for a cent. then think about how much each individual piece of paper cost you.
maybe when bread is so superabundant, you will pay a single gold atom for a years supply with daily delivery included…
I agree that it could happen and that it would be problematic. It seems like the natural progression with a gold standard would be for the purchasing power of gold (and paper notes and coins of other metals that represent quantities of gold) to increase to the point where the monetary value of an atom of gold could eventually buy a loaf of bread and eventually even more. I often think about the supply of gold a little over a hundred years ago before things like the Model T and Kitty Hawk and then look at the amount of new gold compared to the amount of new things like cars, planes, tractors, skyscrapers, satellites, and computers. With the gold standard it seems like the monetary value of gold would continue to greatly exceed its intrinsic value, and I think this would be problematic.
Why would anything that valuable be used as money? If something becomes that valuable, it would cease to be useful as a money. That’s one reason why gemstones are never used as money.
In addition to what other posters said regarding the use of other monies… in a free market, prices have a tendency toward falling. Buying the functional equivalent of a Model T today (note: not a replica, but a car that can’t do much more than a Model T) would be incredibly cheaper in terms of gold than buying the original Model T at the time of its announcement.