[ldiracdelta]

Yes. That is called deflation. It also has to do with fractional reserve banking. The fraction of your outstanding dollars that you could actually cover with gold. If no one ever wants to make a run on your bank, you can keep the fraction very low.

[user22]

I understand the deflation part, but my question really was is it an economy the size of the united states even possible if we stayed on the gold standard.

[TearsInTheRain]

Not having enough money to transact would definitely have suppressed our economic growth, but then again maybe we would have gotten really good at mining for gold to make up for it

[Ekaros]

"Really good at mining." This might be good point to compare with BTC. Where huge amounts of electricity is spend on doing essentially useless calculations, outside keeping the system safe and running.

Good at mining would have meant spending good part of our economic output to mine gold and then just storing it somewhere or moving it around...