Yes - that's my whole point. The Market should set interest rates. Do you think the market is setting them now???? Right now, you have the FEDERAL RESERVE setting interest rates by massively pumping printed money into Gov't bonds and its Primary Dealer Banks. They have called it their ZIRP (Zero Interest Rate Policy).
You think interest rates discipline Congress? Forces them to reign in deficits? No. It doesn’t. They can still borrow they can still commit your kids to unreasonable burdens. They can still bankrupt the country.
Sorry, but this statement is incorrect. As mentioned, The FED is keeping interest rates at near zero. They are trying to stimulate private borrowing, while at the same time allowing the US Gov't to run a $1.3 Trillion deficit on the cheap.
Now imagine there is no FED buying up cheap Treasury bonds with money they create out of thin air, and imagine that the US Dollar is linked to precious metals with interest rates set by the Market. Could the Gov't run a $1.3 Trillion deficit? No way! Who would buy all those bonds that the FED is buying now? Wouldn't buyers also demand a much higher return?
That is the best discipline on Big Gov't that could exist.
The government was piling up debt and selling bonds just fine before the crisis that required the FED intervention. The FED wasn’t buying government treasuries then, but it didn’t stop congress from piling up the debt. And a gold standard won’t either.