• 2. 6. 2025 • H. T. •
Gold-backed money sounds like the perfect formula for stability—limiting inflation, ensuring trust, and keeping reckless government spending in check. But time and again, nations have abandoned the gold standard when faced with economic crises or war. Why?
🔸 Governments & Deficit Spending – A gold standard restricts how much money can be printed, forcing governments to balance their budgets. While this keeps prices stable, it limits their ability to finance wars, stimulus programs, or bailouts. Historically, when governments needed more spending flexibility, they ditched gold.
🔸 The Greece & Rome Problem – Ancient civilizations like Rome debased their gold and silver coins, mixing in cheaper metals to fund military campaigns. Over time, this led to inflation and economic collapse—proof that governments will always find ways to expand money supply.
🔸 The U.S. Gold Standard Collapse (1971) – By the time of the Vietnam War, the U.S. was running large deficits and printing currency. Foreign nations started redeeming their dollars for gold, draining American reserves. President Nixon ended gold convertibility—proving that during economic strain, gold-backed money is the first casualty.
🔸 Flexibility—But Only One Way – A gold standard prevents easy inflation, but modern monetary policies seem to favor only expansion, never contraction. Governments never tighten money supply once it has grown, leading to persistent inflation.
While the gold standard promises disciplined spending and stable prices, history shows that governments won’t be constrained forever—when crisis hits, gold gets abandoned, because it can’t be printed.
