Reply #34: You and a few libertarian armchair economists, maybe. [View All]

[trotsky]

The big problem with the gold standard is that it chains your economy to a fixed money supply. It's very difficult for an economy to grow effectively. Plus, once you have a slight downturn, people start hoarding the money/gold, choking the economy further when what it really needs is more money. When you use fiat currency and Keynesian monetary policies, you have weapons to fight these downturns (as well as stave off inflation). Not surprisingly, no country that dropped the gold standard has experienced a depression.

http://home.att.net/~resurgence/L-gold.htm