Does a gold standard really protect us from inflation?
During and shortly after the colonies won the Revolutionary War, the US looked as if it might become a failed state. Inflation was as high as 47%. During the Civil War, Union inflation hit 40% and the Confederate dollar inflation ran between 100% to 9,000%; depending on the state and city involved. This was with a gold standard. In fact, the gold standard and the lack of a fractional reserve system and national bank did not ensure against runnaway inflation. Quite the opposite, it made controlling the money supply as the country grew difficult to impossible.
Given these historical facts, where does the confidence in the magic of the gold standard come from? What history teaches us that nations with no central bank and no way to control their supply of money vis-a-vis the supply of goods and services are inflation proof; whereas countries (like all those in today’s developed world) that have a fractional reserve banking system and some form of central bank fare much worse? Are the regressives basing their beliefs in history of fantasy?