Gold Standard
The appeal of a gold standard is that it arrests control of the issuance of money out of the hands of imperfect human beings. With the physical quantity of gold acting as a limit to that issuance, a society can follow a simple rule to avoid the evils of inflation. The goal of monetary policy is not just to prevent inflation, but also deflation, and to help promote a stable monetary environment in which full employment can be achieved
So the advantages of the gold standard are that:
- it limits the power of governments or banks to cause price inflation by excessive issue of paper currency
- it creates certainty in international trade by providing a fixed pattern of exchange rates.
Why did it failed then?
With World War I, political alliances changed, international indebtedness increased and government finances deteriorated. While the gold standard was not suspended, it was in limbo during the war, demonstrating its inability to hold through both good and bad times. This created a lack of confidence in the gold standard that only exacerbated economic difficulties. It became increasingly apparent that the world needed something more flexible on which to base its global economy.
So if Bitcoin solves:
- scarcity
- flexibility
- transparency
- reliability
Then itβs only a matter of time before it becomes fundamental layer of global economy and new monetary policy. And when that happens you better of holding some.
Itβs just mind blowing for me personally that both you and I live in the time when some guy, or group of people, solved all of those gold related problems that we had for 5000 years.
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