The gold standard against money printing

The gold standard against money printing

Some economists argue that a monetary system based on the gold standard will not be stable enough, since in this case gold mining companies, and not central banks, will control the money supply (gold). As a result, prices will fluctuate constantly, and this will influence the discovery of new gold deposits.

That is why, according to these economists, there will be temporary moments of inflation and deflation in the economy, as it will all depend on whether or not a new gold deposit is found.

This view does not withstand criticism for many reasons, based on the history of the monetary system. In this context, two issues need to be considered: 1) average prices during the Gold Standard system and with fiat money, and 2) monetary inflation (money printing) in recent years.

The exact opposite of the Gold Standard system is the monetary system of fiat currencies. From 1971 to 2010, when there was no gold standard in the United States, price inflation was 4.5% annually. And this despite, or even precisely because, central banks control the printing of money. A commodity worth $ 1 in 1971 now costs about $ 5.55.

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