Wiley,
The discussions about pros/cons of gold standard with gold bugs is a long,endless and tirring debate so I am not going to go there. The reason I called the gold standard ‘idealistic’ is because theoretically the gold standard theories rely on the freedom of action that is distributed between free movement of capital, and effective monetary and fiscal policy. However, one reason that most modern macro-economists do not support a return to gold is the fear that this remaining amount of freedom would be insufficient to combat large downturns or deflation.
This argument can also be termed as “controlled inflation” vs “controlled deflation” as goal of monetary policy. Most economists fear that gold standard creates deflation and people don’t spend money and buy stuff in deflationary scenarios thus causing recessions. Also, gold standard doesn’t necessarily guarantee fiscally responsible govts as we saw in WW1 when govts printed money without care for gold, hoping to return it after winning the war. I believe (like most) that there should be some form of hard currency. What we have on hand now is an inflationary extreme but a gold standard would be another extreme. If you have stats/data to show otherwise (since the industrial revolution) then I would love to hear.
