Why did they abandon the gold standard in the 1930s?
Gold or any other commodity as a currency does not protect against inflation… the price of other currencies rising relative to the commodity used for currency, and it does not protect against deflation, the price of the currency commodity rising relative to other commodities. What a commodity based currency does is remove a temptation for government to adjust the relative value of the currency for its purposes, however well intentioned. With a real commodity as currency base, we would expect that having a limit to the number of multiples of currency against stores of the commodity would protect the value of the currency, as long as the currency is inclined to devalue. What it did not do in the 30’s was protect the value of the currency when the currency tended to rise in value, making it impossible to export, making imports too cheap. Governments in the 30s began to realize that when their currency is fully issued, up to the multiples allowed, they have no way to issue more currency
