By Cam Hui:
Advocates of the gold standards tend to be Libertarian in outlook, and Libertarians don’t like government interfering in the free market. Yet a gold standard means that the government, or some other authority, is interfering with free market forces.
To explain, the Liberty Street Economics blog from the New York Fed (if the link doesn’t work because of the government shutdown, try this one) presented what I interpreted as a cautionary tale about unwarranted government interference in the free market. The tale begins in the 1600s, when England was on a bi-metal gold and silver standard:
A bi-metallic standard is a monetary system consisting of two metals—usually gold and silver— where the government or the mint fixes the price between the two metals. As a hypothetical example, the mint might determine that 1 ounce of gold = £1 and 1 ounce of silver = 1¢. Therefore, 1 ounce