The classic criticism against the gold standard is that it was too costly. Why are these guys wasting resources to suit up, dig into mountains, desperately seeking a finite resource, and slogging the results all the way to Treasury Department?

There is a reason that Bitcoin is being called Digital Gold.

This is all just silly. We know how to make money: you print it. It’s far cheaper to print than mine. A paper standard will save a tremendous amount of resources that can go to other purposes.

There is a plausibility to the claim. We do know how to make money substitutes that appear to work just as well as what we used to call money. The costs of mining operations are huge and discovering new deposits has to be funded. It involves speculation and drains financial and time resources, all to find the thing we already know how to make (more or less) with paper and ink.

Keynes Contra Gold

J.M. Keynes agreed. He wrote a monograph in 1923 (“A Tract on Monetary Reform”) that condemned governments for depreciating currency, warned of monetary instability after the war, and then…dropped a bomb at the close of the book. He said that the gold standard is too inflexible for modern times. It has to go. Indeed it is a “barbarous relic” should be replaced by a money wholly managed by the central bank.

Thousands of economists for decades followed Keynes’s view, each of which imagines himself to be the central bank chief, ready to impose his own vision of what monetary power can accomplish.

Gold belongs to past, not to an age of scientific central planning, or so went the refrain. The old-fashioned gold standard, with its limits and discipline and self-managing logic, just has to be destroyed. And so it was, for many decades, until 1974 when all that was left of it was demolished.

Digital Gold

There is a reason that Bitcoin is being called Digital Gold. It was structured to operate the same way as the classical gold standard minus the sponsorship of government. It requires no centralized management. You have to expend resources to become the first owner of the initial resource. There is a finite supply of the specie payment. Payments are finally settled when made. Bitcoin is the gold standard ported over to the digital age.