- Rustam Eynaliyev
The biggest drawback of a gold standard as well as it's biggest advantage is that gold is scarce. The advantage is that central banks can not create more money, thus causing inflation (essentially another form of taxation). The drawback is inevitable deflation from increasing productivity of the economy which could cause decrease in lending as well as make production less competitive on international markets. Here are my propositions to solve these drawbacks: Tax cuts on revenues coming from lending. Allowing fluctuating exchange rates do their job and allow internal market to adjust to new market realities.
I'm wondering if there any other drawbacks that I'm missing out on, as well as flaws some of you might notice in my ideas.