1/Thread time! In this thread I will explain why the gold standard is an absolutely terrible system, and why a bitcoin standard is no better.
Again this is a case against bitcoin, not the entire digital assets space.
Gold Standard: Walking into Depressions since 1929.
2/Let's first tackle the myth that the gold standard provides stability of any sort. The gold standard (as much as in theory we'd like it to) does not control or stabilize inflation.
Prices have been much more stable since 1971 than before 1929:
3/Another part of this stability argument comes from the annual GDP or GNP growth rate. There is no stability under a gold standard whatsoever:
Here's the chart. Once again, we have been better off since 1971 than before 1929:
4/Lastly, the frequency of banking crises has been a lot lower without the gold standard than with it.
The last 50 years saw two major banking crises - the GFC and the S&L crisis in the 1980s. The period of the "purest" gold standard (1880-1929) saw 5 full on panics.
5/Why is the gold standard so bad?
Firstly, gold standard tends to exacerbate economic excesses, while a fiat based system corrects them. Let me explain.
Economic booms lead to increases in inflation.
