Yeah - but it's not the gold standard itself which causes the...

Yeah - but it's not the gold standard itself which causes the problems.

It's NEVER any particular system of exchange which causes the problems - but is caused by standard geo-political wrangling. When those political forces achieve a period of balance then the particular exchange system in place will do a good job. The gold standard did a great job before the first world war - because the world had a certain political stability that was led by Britain. central banks co-operated with the status quo in order to preserve that stability - and helped out countries facing balance of payments crises.

After WWI - britain was no longer in a position to play this role and the hegemony collapsed. The reinstitution of the gold standard was disastrous for that reason because it prevented a new hegemony being developed.

After WWII - the USA instituted a new order under breton woods. A new stability was created which was comparatively so strong that the USA could even ditch gold convertability without anyone even really caring. WIth most of the world accepting the status quo - such a change did not matter.

So then - why do you go on at the end to say gold in some ways is worse?