Gold standard

Wikipedia, the free encyclopedia:

The history of money consists of three phases: commodity money, in which actual valuable objects are bartered; then representative money, in which paper notes (often called 'certificates') are used to represent real commodities stored elsewhere; and finally fiat money, in which paper notes are backed only by use of' 'lawful force and legal tender laws' of the government, in particular by its acceptability for payments of debts to the government (usually taxes).

Commodity money is inconvenient to store and transport. It also does not allow the government to control or regulate the flow of commerce within their dominion with the same ease that a standardized currency does. As such, commodity money gave way to representative money, and gold and other specie were retained as its backing.

...A 100% reserve gold standard, or a full gold standard exists when the monetary authority holds sufficient gold to convert all circulating money into gold at the promised exchange rate. It is sometimes referred to as the Gold Specie Standard to more easily identify it from other forms of the gold standard that have existed at various times. A 100% reserve standard is [nearly impossible] to implement as the quantity of gold in the world is too small to sustain current worldwide economic activity at current gold prices. Its implementation would entail a many-fold increase in the price of gold. Furthermore, the "necessary" quantity of money (i.e. one that avoids either inflation or deflation) is not a fixed quantity, but varies continuously with the level of commercial activity.

I usually find that Wikipedia does a great job, but this entry goes off track in several places. For example, Wickipedia says that an advantage of the gold standard is that it would require periodic deflation. That was actually a major problem. Deflation is very destructive because it nearly eliminates banking.
Wikipedia also says, "Many liberal economists believe that economic recessions can be largely mitigated by increasing money supply during economic downturns.^[17]" but this is part of mainstream conservative economics too. As evidence, Wikipedia cites Greg Mankiw who is a conservative economist. Conservative economists have actually pushed the importance of active monetary policy much more than liberal economists because many conservative 'monetarists' like Milton Friedman wished to reduce the reliance on Keynesian government spending during recessions. That was a big reason for the conservative school of thought known as monetarism.  Another problem is that Wikipedia cites Alan Greenspan as a prominent proponent of the gold standard, but he abandoned that idea at least three decades ago when he went to work for the Fed and was put in charge of fine-tuning the money supply. Wikipedia also says:

Representative money and the gold standard protect citizens from hyperinflation and other abuses of monetary policy, as were seen in some countries during the Great Depression.

Representative money does not always protect citizens against hyperinflation because governments can always devalue the representative money. The Great Depression is a ridiculous example because it is better characterized as a period of deflation rather than inflation and governments generally devalue currencies during crises like that. As Milton Friedman documented, the main abuse of monetary policy in the depression was that governments did not expand the money supply (and devalue the currency) enough (nor quickly enough).  A big part of the problem was a desire to remain on the gold standard. Wikipedia goes on to contradict itself:

... the earliness with which a country left the gold standard reliably predicted its economic recovery from the great depression. For example, Great Britain and Scandinavia, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer.

A huge amount of the total gold in the world is still held by central banks as a kind of reserve currency for foreign exchange manipulation and to diversify risk.

...The total amount of gold that has ever been mined has been estimated at around 142,000 metric tons.^[12] Assuming a gold price of US$1,000 per ounce, or $32,500 per kilogram, the total value of all the gold ever mined would be around $4.5 trillion. This is less than the value of circulating money in the U.S. alone, where more than $8.3 trillion is in circulation or in deposit (M2).^[13] Therefore, a return to the gold standard, if also combined with a mandated end to fractional reserve banking, would result in a significant increase in the current value of gold, which may limit its use in current applications.