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April 12, 2005
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DM
I’m no expert either, but, generally speaking, the gold standard causes quite sharp deflationary adjustments. deficits in the current balance of payments result in a loss of gold for the indebted country–leading to loss of the quantity of money. Loss of money in this way leads to sharp decline in consumer demand and deflation, unemployment, depression (in part, what happened in 1929).
Posted by: slothrop | Apr 15 2005 17:05 utc | 102
Also, as deanander and askod and others emphasize, the production of gold is dirty business. I was an apprentice hardrock miner in a major n. american gold mine, and I can tell you from experience, hardrock gold mining is a disaster: release of highly mineralized water into water table, aresenic/mercury contamination from tailings, the permanent scarring, etc. bad news.
Posted by: slothrop | Apr 15 2005 17:11 utc | 103