Aretae notes that "ALL" economists agree that "Gold standards are substantially bad for some important things."
In the trivial sense, this should be true. A good economist (like a good engineer) should acknowledge that everything has tradeoffs. The more interesting question is what we should conclude from the fact that virtually all mainstream economists vehemently oppose a gold standard.
My suggestion would be that we should conclude nothing.
- Mainstream economists get to choose other mainstream economists and support of the gold standard, by definition, means that you’re not qualified to be a mainstream economist. So, the fact that mainstream economists don’t like the gold standard is akin to the discovery that Catholic priests don’t like Martin Luther.
- Economists should be skeptical of counting heads. It’s much more interesting to look at how much someone’s opinion is worth. The average econ-blogger’s opinions on the gold standard costs $0. Jim Grant’s cost about $1000/year. I’m with Grant.
- As I understand mainstream economic thinking on fiat currency, mainstream economists believe that if a country has a fiat currency and issues debt only in said currency, the country is immune from default. In a trivial sense, this is true – reality doesn’t work that way though. (It’s also interesting that mainstream economists believe in the importance of independence of central banks, but they don’t see rising debts as a threat to central bank independence).
- For a decade or two, free market economists were on the ascent. The current mainstream faith in fiat currency has effectively reversed this ascent. If central planners can effectively manage the money supply, they should be able to manage anything. Apparently the Soviets only failed because they lacked fast computers and really good economists.