Part 5/16:
The dialogue revisits the history of the gold standard, explaining why it ultimately failed. The initial gold system suffered from centralization and the inability to maintain pegs due to imbalances and intentional currency debasement. The Bretton Woods system, which replaced gold with the dollar backed by gold, was inherently unstable, quickly collapsing once the U.S. ran into deficits and the world started exchanging dollar holdings for gold.
The speakers underline that centralization—where gold was held dominantly in the hands of central banks—opened vulnerabilities, leading to systemic failures. They stress that true stability requires constraints—like limited gold supply—that prevent arbitrary expansion of the monetary base.