But what about the citizens and the economy? The economy and citizens flourished under a true gold standard. When the monetary base is stable, so too the living standards of its citizens. A stable currency is a must for a stable economy. In 1865-1913, the U.S. was living in a time of prosperity and wealth. Yes, it's true that kids were working during the time and it's true that society were much poorer during the time. But all these are due to the lack of today's or even modern technology that improved the life of american citizens. However, back during those times the American citizens and middle class had a much higher standard of living than any other class around the world, even higher than Great Britain.
Not to mention during this time it was truly the land of the free and opportunity. Anyone could mass vast amounts of wealth, all they had to do was provide something worthy in exchange for an american dollar. So if everything was so great why did the world get off the gold standard? Specifically the U.S.? Simply because the government wanted more power. A common fallacy of why the gold standard did not work was because the flow of gold would exit one's country economy into another; if a country imported more than they exported. Therefore, the country will soon run low on gold because there's simply not enough gold to go around for everyone.
True, gold could or would flow out of a country but only if the country is not producing anything. But even if gold was flowing out of the country, not all the gold would leave the country because what happens is the price of imported (and domestic) goods will adjust to the country's supply of gold. But this is bad you say? Well no, it's just a simple balance of every action having a reaction. As things become more expensive to import, it'll be much cheaper to produce goods here therefore entrepreneurs would start producing goods here and perhaps will be able to compete aboard in the global market. No matter what, every country is good at producing something and the most competitive countries will be the ones that have a lot of economic and personal freedom.
So how will a limited amount of gold effect economies in MMOs? Well, I decided to discuss that in a separate post since this one is already turned out to be longer than I expected. To read more about this subject click here.