Austrian Challenge: What Would the Macroeconomy on the 100% Gold Standard Look Like?
By Bryan Caplan
Arnold mentions that:
The Washington Post reviews The Lords of Finance,
focusing on the role of the gold standard as a policy blunder
contributing to the Great Depression. As I’ve said, a great swath of
economists (starting with Milton Friedman and moving left) takes this
Meanwhile, when asked, “If you could change just one thing about economic policy in the US, what would it be and why?,” Walter Block answers: “Get rid of the Fed, and go on the 100% gold standard instead.”
Setting aside the moral debate on 100% reserves, I’ve got to wonder, “Why that?” I presume (though I’m open to correction) that Walter gave this response because he thinks that his preferred monetary regime would almost certainly have much better economic consequences than the status quo. This thought inspires me to poll our readers:
What do you think the long-run consequences of Block’s proposal would be for the average values and standard deviations of inflation, output growth, and employment?
When you respond in the comments, feel free to label yourself an Austrian or non-Austrian if you like.
Extra credit: What would the immediate adoption of the 100% gold standard (as proposed here) do to the economy over the next two years?