Those are two very great flaws, but I'd add another, the inflexibility on monetary policy relative to fiat money.
We were expanding fast as a nation territorial wise, but economically not so much..."The Long Depression is sometimes held to be the entire period from 1873–96."
Business and the market will eventually forecast and attempt to factor in future deflation or inflation. But deflation is insidious in that it incents people to hold capitol in currency instead of investing it. If you can make 3 or 4% by just holding on to dollars, why invest? Persistent deflation makes for an economy with a very inefficient use of capitol.
"Today's has the great flaw of debt piled upon debt until the current system comes apart because of???
But I don't see that as a limitation of the gold standard. There is nothing to stop congress from borrowing and promising that our children will pay the chinese back in gold. No monetary system will stop congress from borrowing. Only a determined citizenry can do that.
But they are bailing water right now, not fixing the holes. Congress is supposed to do that, and they haven't.
Exactly on Congress. But I don't see the Fed as really bailing water yet because of congressional spending. The FED has kept inflation down, telling me they aren't bailing due to congressional spending.
And while QE does raise inflation fears, I see QE as more a response to current unemployment situation. And I don't see the current unemployment as a result of congressional borrowing, but rather as the result of unwise trade policies, a failure to prepare for the oil price shock, and a failure to regulate derivatives and abusive credit practices.
The gold standard doesn't prevent any of this anyway because it doesn't count for 1.Changes in supply within the market, 2.People's perception of the value, & 3.Government manipulation of the value through controlling the production cycle. Having the currency based on a fixed point like this is even riskier as only one commodity needs to be manipulated to crash an economy.
Imagine a scenario where we have our currency based on gold, and ten years down the future, a South African mine hits a major vein and dumps 500 tons into our market. It would, over night, greatly devalue our currency. Or worse, what if there were a mining disaster in Peru and the courts there immediately froze all mining, with other countries following. Even a temporary freeze would impact the supply and affect value. The result of course would be the government comes in and manipulates the value by printing the 'gold notes' on credit to protect(sic) our economy.. and we have the federal reserve cycle all over again.
Which is why we had to leave the gold standard in times of crisis.
But I don't see the Fed as really bailing water yet because of congressional spending. The FED has kept inflation down, telling me they aren't bailing due to congressional spending.
That may well be true. I really don't know enough about the subject to argue against it.