[Futurework] Gold Standard

[Ed Weick]

In response to something I said about the gold standard, Keith Hudson said: I don't think we need to read Polanyi or any other economist on why countries abandoned the gold standard. There was simply not enough of the metal to go round as a coinage (or even in ingot form in the bank) during the course of the 19th century in which industrial populations and general prosperity were growing in leaps and bounds, and larger and larger tranches of money were being exchanged. I've been thinking about the abandonment of the gold standard since then, though, as Keith suggests, without rereading Polyani.  I believe that Keith correctly identified the problem: there simply wasn't enough gold to go around.  But why?  Gold is not really scarce as a mineral.  What probably happened is that, on the gold standard, the price of gold remained fixed while all other prices rose, including the cost of finding and mining gold.  After a time, it just wasn't worth it.   Behaviour with regard to finding and mining gold today depends very much on its price.  Much of the time, it's not worth it.  But every once in awhile, the price of gold goes up and prospectors and geologists get out into the field and worthless mines begin producing again.  Yet it never seems to last very long. Ed Weick