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<p>[QUOTE=&quot;Ag76, post: 3414209, member: 100584&quot;]Commodity standards can work reasonably well so long as banks - including central banks, if they exist - follow the rules of the game. That means contracting note issue when notes become less valuable than specie. Under the interwar gold exchange standard, central banks did not follow the rules - France and the U.S. both &quot;sterilized&quot; gold inflows by suppressing note issue even as Austria, Germany, and the UK were struggling with gold outflows.</p><p><br /></p><p>It&#039;s probably unrealistic &amp; undesirable to go back to a commodity standard today, so long as people are free to invest in bullion and foreign currencies. The Fed has little incentive to destroy the value of the dollar with inflation given that people can easily switch out of their dollar holdings. Ironically, the bigger threat these days may be excessively *deflationary* monetary policies.[/QUOTE]</p><p><br /></p>

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