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Should the World Go Back to the Gold Standard?

Should the world return to the gold standard?

I've been listening to Jim Grant on our air calling for a return to the gold standard. I can understand it's attractive for some: Price stability is its one great virtue, since a government cannot change the money supply without changing the gold supply.

But the math doesn't even come close to adding up. Do it yourself: The total amount of gold ever mined is about 165,600 metric tons, according to the World Gold Council. That's about 5.8 billion ounces, multiplied by $1,500 an ounce, which is about $8.7 trillion. That's just about the roughly $8 trillion that is the total value of the money circulating or on deposit (M2) in just the U.S. alone.

Even if you think the U.S. money supply is inflated, it's clear the world would have to dramatically shrink the amount of money in circulation to go back to the gold standard.

The U.S. went off the gold standard in 1971; the U.K. in 1931. Switzerland was the last to go off, in 2000 as I recall.

There's a reason they all did.