Fix the value of money and the burden of adjustment falls on other parts of the economy. Countries abandoned the gold standard in the 1930s because democratically-elected politicians found themselves unable to impose the kind of austerity required to maintain their gold reserves (the 1931 British Labour government balked at a 20% cut in unemployment benefit, for example). The economic historian, Barry Eichengreen, found that the earlier a country left the gold standard, the quicker its economy recovered. He also suggests, very plausibly, that it was easier to stick to the gold standard in the 19th century because many workers did not have the vote.
— Buttonwood’s Notebook: “How Fixed Would a Gold Standard Actually Be?”
