The Gold Standard: When Money Meant Something

What It Covers

Josh and Chuck trace the gold standard's full arc — from early U.S. bimetallism through the 1900 Gold Standard Act, the Great Depression's forced abandonment, the 1944 Bretton Woods agreement, Nixon's 1971 exit, and the ongoing debate between gold bugs and fiat currency advocates.

Key Questions Answered

• •Why gold was chosen: Gold became the universal currency backing because it satisfies a precise set of criteria — scarce but not impossibly rare, divisible, malleable, corrosion-resistant, and durable. As of 2025, 219,890 tons have been mined in history, with roughly two-thirds extracted since 1950, and most still exists in some form today.
• •Gold standard's core constraint: Under a true gold standard, governments cannot print more currency than they hold in gold reserves. This eliminates monetary policy flexibility entirely — during economic crises, no levers exist to pull. The U.S. Civil War demonstrated this when unconstrained money printing drove inflation to 25%, then aggressive currency removal triggered the Long Depression from 1873 to 1897.
• •Why fiat currency won: Economists broadly credit the U.S. abandoning the gold standard in the 1930s with ending the Great Depression. Printing money reversed a deflationary spiral where 25% unemployment and 10,000 bank closures between 1930–1932 paralyzed the economy. Deflation — not inflation — is the harder crisis to escape, because hoarding behavior compounds economic contraction.
• •Gold vs. stock market returns: A $5,000 investment in gold in 1971 would be worth roughly $379,500 today — a 7,500% return. The same amount invested in the S&P 500 with dividends reinvested would exceed $1,185,000, nearly a 24,000% return. Adjusting for inflation, $5,000 in 1971 equals $40,000 today, leaving over $1.1 million in real gains from equities.
• •Why returning to gold is mathematically impossible: Total global gold value stands at approximately $36 trillion — identical to current U.S. national debt. The entire global economy is valued at roughly $126 trillion. No mechanism exists to compress a $126 trillion economy into a $36 trillion gold-backed system, making any gold standard revival structurally unworkable regardless of political preference.