Awright, so brief late night postings carry inadequate detail. Let me expand on my points.
There isn’t enough of the stuff.
The shift from fiat to gold would skyrocket the value of gold overnight, to something like $10,000/oz. Great if you have it, awful if you don’t. Being on a gold standard would be great; getting there would cause wars.
One of the compelling historical reasons for gold as currency is the convenient value-to-volume ratio: a lot of value in a small package, but not too much value. Platinum has better value density, but platinum coinage is avoided ‘cuz it’s too valuable per volume. Going onto a gold standard with the limited supply we have would do similar, putting too much value in too little space.
Supply growth vs. GDP
The gold supply doesn’t grow on par with wealth creation growth rate. Ergo, we’d be subject to perpetual deflation. As more people produce more wealth, the ratio of gold-to-value decreases, prices drop, and familiar results ensue. Much can be said in favor of a currency which maintains prices; shifting prices introduce an annoying (if not damaging) complexity.
Gold is, of course a physical limited commodity. I’m not sure pinning a nation’s currency on a particular commodity is as much an improvement over fiat currency as we’d want, given the complex interplay of commodities and other goods/services. I keep toying with the idea of how to quantify value outright, some unitless number not subject to political declarations (fiat currency) nor artificial linkages (gold standard). With the ability to mine world data for prices, there should be a way to identify total relative values of all things to all things - akin to the old line that a good handgun is always worth an ounce of gold, but on a grand holistic scale.
Pondering this, I’m better understanding an underlying point: those who have gold would benefit from a transition to gold, those who don’t would suffer. Being more of the latter than the former, don’t see it happening.
And what's wrong with that? Imagine your salary was $1000/month. If prices were declining - which reflected general productivity increases in the economy as more goods became available for the same money stock, then you would have RISING REAL WAGES.
Now imagine the opposite. Your salary is $1000/month, but inflation is running 3% p.a. (in reality, probably higher). This is what the FED has given us over the last 40 years. With fiat money, your wages will always lag behind inflation. Why do you think real working wages have stagnated since 1971?
Fiat money and printing is a stealth tax. It steals productivity increases in the economy and it steals your wages, and it steals your savings - all to support Gov't deficits.