An upshot of gold standard over fiat currency is that it helps dissuade misuse and wasteful overspending. If money is physically-backed by gold, there is less likelihood of governments spending beyond their means. Given that almost every nation has a huge debt, a gold standard would not be able to service a modern economy. The gold supply cannot be expanded at the same rate that the economy grows. If the economy grows faster than the amount of gold backing the money, it will result in deflatino because more economic output is mapped to each ounce of gold. Deflation would then damage the economy because money is no longer stable & debts become harder to pay causing defaults. If the US has a gold-backed standard, they would be inhibited from spending more than the amount of golf they have in the vaults (which represents the value of thier money).
An upshot of gold standard over fiat currency is that it helps dissuade misuse and wasteful overspending. If money is physically-backed by gold, there is less likelihood of governments spending beyond their means. Given that almost every nation has a huge debt, a gold standard would not be able to service a modern economy. The gold supply cannot be expanded at the same rate that the economy grows. If the economy grows faster than the amount of gold backing the money, it will result in deflatino because more economic output is mapped to each ounce of gold. Deflation would then damage the economy because money is no longer stable & debts become harder to pay causing defaults. If the US has a gold-backed standard, they would be inhibited from spending more than the amount of golf they have in the vaults (which represents the value of thier money).