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<p>[QUOTE=&quot;GoldFinger1969, post: 8249803, member: 73489&quot;]The main problems with going back to some version of the Gold Standard are that (<b><span style="color: #ff0000">1) it would hamstring the Federal Reserve</span></b> and <b><span style="color: #ff0000">(2) if rigidly enforced, it would not allow for external but only INTERNAL devaluations and adjustments.</span></b></p><p><b><span style="color: #ff0000"><br /></span></b></p><p><span style="color: #000000"><b>A (rigid) gold standard would have prevented the quantitative easing that we needed in March 2020 and October 2008.</b></span></p><p><span style="color: #000000"><br /></span></p><p><span style="color: #000000">Since prices and labor wages are sticky to the downside, it would mean <b>larger periods of unemployment and lost GDP. </b> This is what has worked against Italy since it joined the EU and the Euro.</span></p><p><span style="color: #000000"><br /></span></p><p><span style="color: #000000">You also have to worry about </span><b><span style="color: #0000ff"><i>&quot;The Denominator Effect&quot;</i></span></b><span style="color: #000000"> whereby nominal GDP is not allowed to grow and reduce the real debt burden of Debt/GDP by either growing nominal AND real GDP or letting it fade via a slowly rising rate of inflation (not the galloping &quot;transitory&quot; nonsense <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie8" alt=":D" unselectable="on" unselectable="on" />we have now).&nbsp; Austerity measures can INCREASE the debt burden because GDP falls more than debt.&nbsp; See....Greece, Italy, and the rest of the PIIGs, etc.</span>[/QUOTE]</p><p><br /></p>

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