Something for the gold bugs:
<a href="http://www.irvinehousingblog.com/wp-content/uploads/2008/03/gold-fiat-money-and-price-stability.pdf">Gold, Fiat Money and Price Stability</a>
A commodity money regime such as the classical gold standard has long been
associated with long-run price stability. During that era, though, many economists
worried about instability associated with the gold standard and proposed
fundamental reforms. Fisher (1934) traces the evolution of the idea of a monetary
standard based on a price index and describes 28 nineteenth century proposals
made by legislators and prominent economists.1 Perhaps the most well known is
the compensated dollar proposal made by Fisher (1913) himself. Since the end of
the gold standard, many economists have argued that a fiat money regime based
on credible rules for low inflation could do better than commodity money (see, for
example, Friedman 1951, 1960). In 1980 that promise was in doubt. High and
variable inflation was the number one economic problem facing the major
market-type economies. The U.S. gold commission was given a mandate to
evaluate a future role for gold in the U.S. monetary system.2 Since then, however,
it appears that central banks have learned how to maintain low inflation in a fiat
money system. Many central banks have adopted implicit or explicit inflation
targets in this new era.
