[mookiemookie]

Not to mention that the key to making the gold standard actually work is the faith the people place in the government actually sticking to it. After the Great Depression (caused in no small way by the gold standard and there's a strong correlation to the length of time that a country stayed on the gold standard to how greatly the Great Depression affected said country) it's clear that the gold standard can be dropped at any time.

Uncertainty in the markets is generally a bad thing and people will take a "flight to safety" into the one asset that's safe under the gold standard - gold. If the price of gold goes up, and your currency is pegged to it, then your currency is devalued....essentially paying more for gold since the supply of it is drying up because people are hoarding it. Deflation occurs and then you're in a deflationary spiral....from Wikipedia: "decreases in price lead to lower production, which in turn leads to lower wages and demand, which leads to decreases in price."

I don't think it's an idea that can work in today's deregulated currency markets.