Republican Party to study gold standard, a bad idea

I assume that there is a good chance that this commission will bury this proposal, but here is the proposal.

The gold standard has returned to mainstream U.S. politics for the first time in 30 years, with a “gold commission” set to become part of official Republican party policy.Drafts of the party platform, which it will adopt at a convention in Tampa Bay, Florida, next week, call for an audit of Federal Reserve monetary policy and a commission to look at restoring the link between the dollar and gold.The move shows how five years of easy monetary policy — and the efforts of congressman Ron Paul — have made the once-fringe idea of returning to gold-as-money a legitimate part of Republican debate. . . .

Here is the recent history of gold prices.  The stability up until the 1970s is an illusion because the value of the dollar was fixed in terms of gold.  But the extreme volatility of gold prices since then shows what would have happened to inflation and deflation if we had been on the gold standard.  Between 2001 and 2011, the price of gold rose by 5.8 fold.  What would have cost $100 in 2001 would apparently only cost $17.24 in 2011.  Could you imagine the chaos created by having that average change in prices over a decade?

UPDATE: What did inflation rates look like when countries were on the Gold Standard?  Here are some numbers for the UK (the entire 1750 to 1998 period is available here).  Even if the price level was relatively constant over the long run, you seem to have significant swings from one year to another.  Here is some information on the adoption dates for the UK:  "On 22nd June 1816, Great Britain declared the gold currency as official national currency (Lord Liverpool’s Act). On 1st May 1821 the convertibility of Pound Sterling into gold was legally guaranteed."