The New Republic claims it would be a disaster. Here are their reasons, with Smiling Dave's replies. Now I notice that many of my replies make economic assumptions that need to be elaborated on. Standard Austrian Economics will fill in the gaps, and of course you, dear reader, can ask any question you wish.
1. The United States would be unable to respond quickly and effectively to sudden economic shocks.
First of all, the really big shocks, the ones that ruined whole countries, such as the Great Depression and The Mess We are In, and of course every war we ever had, were all caused by the govt spending unlimited amounts of money, which they did by going off the gold standard and printing paper money. So that most of the shocks would just not exist if we were on a gold standard.
Second of all, the last thing we want is the "United States", meaning the govt, "responding" at all to sudden economic shocks. Because "responding" here means printing money, which is just a way of robbing our purchasing power and giving it to their friends. Which is the last thing we need when a shock comes along, to have our pockets picked.
2. Recessions would be deeper and longer, and the economy would be biased towards deflationary spirals.
No, they would not be deeper and longer. Deep, long recessions are caused by govt meddling as they fumblingly try to "fix" the economy. The whole point of a gold standard is to limit the ability of a govt to meddle. Ergo recessions would, if anything, be shorter under a gold standard.
As for deflationary spirals, that is just a myth. If the govt is unable to print money at will, then of course prices will get lower as productivity naturally improves due to capital accumulation and human ingenuity. Like the price of cell phones and computers have gone down all the time. But that is not a defaltionary spiral. that is a blessing.
3. Witness the fact that the United States, which remained on the gold standard till 1933, had a much longer and deeper recession than Britain, which had gone off gold in 1931.
This is like saying the rooster crowing causes the sun to rise. The US had the meddling FDR, the British tried to balance their budget. In any case, they too, went off the gold standard, and had high unemployment until WW2 gave them all jobs getting killed.
4. Milton Freidman himself (often cited as the supreme authority by gold-standard bearers) warned about just this problem in his magnum opus, Monetary History of the United States, 1867-1960, instead advocating a steadily-expanding supply of paper money.
This fallacy is known as appeal to authority. And I don't know which gold standard bearers he means, but Austrian Economists are not stupid enough to think someone who believes in constant money printing is a supreme authority.
5. It would increase government regulation of the economy. With no Fed, inexpert Congress will bear the onus of alleviating economic suffering.
As opposed to the expert Fed, hey? All the Fed can do is print money, meaning steal our purchasing power. What great expertise is needed to do that? And how can stealing our money alleviate economic suffering [except of course the economic suffering of Obama and his pals]? Notice how effective they have been getting us out of our current mess. Meaning totally ineffective.
6. With deeper, longer recessions, Congressmen will inevitably succumb to pressure for more spending and regulation of the economy--as they did during the Great Depression.
A few fallacies here. We already said there would not be deeper, longer recessions. Also, the Fed totally regulates the economy right now, by setting interest rates. And all that money they print, guess what is done with it? It's spent. Finally, the govt always wants to meddle in the economy, Fed or no Fed. Witness all the horrors we are seeing right now, such as Obamacare, "stimulants", "jobs creations" and on and on.
I haven't the tools to deal with the rest of the article as it deserves, so that's all folks.
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