Originally Posted by Joe_Smith
The US dollar was pegged to the gold standard until 1933, correct me if I'm wrong.
The kind of gold standard promoted by libertarians, which is the only sensible one, is 100% gold. If there's paper money there is an ounce of real gold for every one ounce gold certificate. Every paper certificate could be redeemed for its gold and there would be no problem. Runs on the bank could put the bank out of business, but every deposit would be there.
The Fed did not use a libertarian gold standard in the roaring twenties. Roosevelt had to confiscate privately held gold because there was more money than gold, and allowing citizens to redeem their dollars at the fixed rate would have been the biggest "bank run" ever, emptying out the federal gold vaults long before all the dollars could be redeemed.