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The gold standard, it seems, is a sort of economic ginseng: a broad-spectrum financial snake oil that purports to cure almost any ill one can imagine. One of the interesting things emerging from the argument about the gold standard is that many of its proponents seem to believe that it will somehow force the government to spend less money, or balance its budget.

I have no idea why they believe this. Is the gold standard going to prevent the US government from issuing bonds? Will Congress have to lower tax rates in order to protect IRS agents from lower back strain? Seignorage, aka the "inflation tax" is not an important source of revenue for the federal government; it's not even a particularly important source of revenue for private banks, which collect most of it. The gold standard will not prevent the government from doing anything--except respond to changes in the demand for money.

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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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