Its not really possible as the global economy expands... currency floating and getting off of precious metal based monetary policy is inevitable
The government has a hard time even meeting demand for the silver and gold eagle bullion coins; god knows how difficult it would be to use even small amounts of precious medals in general circulation
Its not really possible as the global economy expands... currency floating and getting off of precious metal based monetary policy is inevitable
The government has a hard time even meeting demand for the silver and gold eagle bullion coins; god knows how difficult it would be to use even small amounts of precious medals in general circulation
True, it is difficult for a government to stay issue gold or silver coins, which requires adherence to a strict gold or bimetallic standard. But it is no more impossible than it is for a government to enforce a gold standard than it is to have any other sort of "fixed" currency exchange rate. A country like Portugal and Ireland, which use the Euro is in a situation not much different than they would be in with a gold standard. They must deal with a limited amount of hard currency (the Euro) which they cannot just print to meet government shortfalls. Now, the comparison is not perfect, since the ECB CAN print more Euros, but as an independent institution, the additional currency should be exogenous to the member states' monetary policy (like the discovery of new gold), at least theoretically.
I think the easiest way to keep countries on the Gold standard would be a few PODs during the Great Depression. First, GB, the first country to drop the Gold Standard would have suffer a longer, more prolonged slump, completely discrediting the idea of adopting an "easy money" policy to escape the great depression. Second, you need someone other than FDR to take office during the 1930's in the US who is ideologically committed to the Gold Standard (like John Nance Gardiner). The US, and the rest of the world would pull out the Depression, eventually. WWII would occur, and belligerent nations would temporarily get off the gold standard. In the Post-War, however, international community would agree to a new Gold Standard at Breton Woods, not the de facto one they adopted in which the US pegged the dollar to gold, and everyone else pegged to the dollar.
The butterflies from such an outcome would be vast. Countries on a gold standard cannot maintain either deficit spending nor trade deficits for long before chronic gold shortages force an economic contraction. Countries could adopt to this by either heavily restricting international trade, by limiting gold outflows by law (forcing trade to be done mostly on credit), or by avoiding deficit spending. Welfare state programs can still be implemented, but governments will find themselves in a financial straight jacket when revenues fall, a straight jacket they cannot escape by monetizing (inflating away) their debt.
What we would probably see today is Third World countries using their own non-bullion currency, or scrip, which would trade at a heavy discount on the world currency markets. Nominal prices worldwide would be heavily deflated compared to OTL, with wages nominally similar to what they were in the 1920's, though the purchasing power of gold backed currencies would be vastly higher. Countries like the US and GB would still issue paper money that could be redeemed for Gold, but redemption would likely be difficult, with withdrawal limitations on gold to limit bank runs.