The chief drawback of the gold standard is the loss of independent monetary policy: a country ties the short-term fate of its economy to the world gold supply, so it cannot use monetary policy to cushion shocks like crop failures and must instead endure tight money, high rates, and gold loss—making its fate hostage to events in gold producers like South Africa and Russia.

normativepending

Speaker

Douglas Irwin

Evidence Quote

by losing an independent monetary policy, you're sort of tying the short-term fate of your economy to the amount of gold in the world

Source

Douglas Irwin on the Great Depression and the Gold Standard 10/11/2010EconTalk
Created: 6/15/2026, 9:36:56 AM

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