Hey Bob…I get all the arguments for the gold standard but at the end of the day isn’t the issue that society isn’t willing to live with the human toll exacted by the consequences of strict austerity? For example the catastrophic unemployment during the Great Depression. I realize we might not have gotten into the GD if we had sound money in the first place.
How do we transition to sound money without going through a period of very restrictive austerity and a big dent to our prosperity with a lot of human suffering? Just asking…
Such an excellent question — and exactly what we all learned studying textbooks in school.
The key insight from Austrian economists, and from Saifedean’s work, is that the Great Depression wasn’t caused by the gold standard but by years of credit expansion followed by abandoning it. Under a true hard-money system, downturns tend to be sharp and self-correcting because bad banks fail early rather than after leverage has piled up.
But your real question is the transition: how do we move toward sound money without massive austerity and human suffering?
Here’s the part most economics courses didn’t teach us:
Transitions to hard money rarely begin with government policy — they begin with market behavior. As fiat begins to fail faster, people, companies, and eventually governments start hoarding the harder form of money. (Notice that this is happening rapidly since 2022.) That accelerates the loss of confidence in the weaker currency, which pushes even more actors toward the harder one. This is how monetary history has always worked: hard money crowds out soft money.
This dynamic only broke in the early 20th century because telegraphs and modern communications made gold too slow for global settlement, allowing governments to centralize gold holdings and issue paper claims on top of them. That’s what weakened the natural competition between hard and soft money. Saifedean — and books like Broken Money — explain this very clearly.
So the path back isn’t a planned austerity program. It’s an organic shift in preferences as the fiat system produces increasingly visible distortions. The system gradually adopts the harder standard because market participants choose it voluntarily long before policymakers do.
In that sense, the suffering doesn’t come from sound money. The suffering comes from prolonging the life of an unstable fiat system until its eventual correction becomes unavoidable.
Hey Bob…I get all the arguments for the gold standard but at the end of the day isn’t the issue that society isn’t willing to live with the human toll exacted by the consequences of strict austerity? For example the catastrophic unemployment during the Great Depression. I realize we might not have gotten into the GD if we had sound money in the first place.
How do we transition to sound money without going through a period of very restrictive austerity and a big dent to our prosperity with a lot of human suffering? Just asking…
Such an excellent question — and exactly what we all learned studying textbooks in school.
The key insight from Austrian economists, and from Saifedean’s work, is that the Great Depression wasn’t caused by the gold standard but by years of credit expansion followed by abandoning it. Under a true hard-money system, downturns tend to be sharp and self-correcting because bad banks fail early rather than after leverage has piled up.
But your real question is the transition: how do we move toward sound money without massive austerity and human suffering?
Here’s the part most economics courses didn’t teach us:
Transitions to hard money rarely begin with government policy — they begin with market behavior. As fiat begins to fail faster, people, companies, and eventually governments start hoarding the harder form of money. (Notice that this is happening rapidly since 2022.) That accelerates the loss of confidence in the weaker currency, which pushes even more actors toward the harder one. This is how monetary history has always worked: hard money crowds out soft money.
This dynamic only broke in the early 20th century because telegraphs and modern communications made gold too slow for global settlement, allowing governments to centralize gold holdings and issue paper claims on top of them. That’s what weakened the natural competition between hard and soft money. Saifedean — and books like Broken Money — explain this very clearly.
So the path back isn’t a planned austerity program. It’s an organic shift in preferences as the fiat system produces increasingly visible distortions. The system gradually adopts the harder standard because market participants choose it voluntarily long before policymakers do.
In that sense, the suffering doesn’t come from sound money. The suffering comes from prolonging the life of an unstable fiat system until its eventual correction becomes unavoidable.