Return to the gold standard

[FM21.105]

So I'm aware that Ron Paul is all for returning to the gold standard. Now, I'm no economist, not even close, and I'm not all too aware why returning to the gold standard would be a bad idea. But I've seen many people here show obvious disdain towards it. Why exactly is returning to the gold standard a bad idea?

Correct me if I'm wrong, but my understanding is that it would be a bad idea because America doesn't even begin to have enough gold to support all of its residents.

[ZenFountain]

Why exactly is returning to the gold standard a bad idea?

A gold standard only works when everybody believes in the overall fiscal and monetary responsibility of the major world governments and the relative price of gold is fairly stable. And yet a lack of such faith was the precise reason the world returned to gold in the late 1920's and the reason many argue for a return to gold today. Saying you're on a gold standard does not suddenly make you credible. But it does set you up for some ferocious problems if people still doubt whether you've set your house in order.

Link (http://www.econbrowser.com/archives/2005/12/the_gold_standa.html)

A compelling argument against gold outside of the actual monetary functionality. Great to say you're on a gold standard with sound money, but when the system is put under deflationary pressure and people want off by popular demand it sets the stage for a total monetary collapse. There also needs to be serious consideration as to how international currecy exchanges work on gold standards. Read how Bretton Woods fell apart when America began running account deficits. Haphazard, temporary agreements had to be made on who was buying gold from who until the system simply fell apart (the Nixon shock).

[Kerberos]

So I'm aware that Ron Paul is all for returning to the gold standard. Now, I'm no economist, not even close, and I'm not all too aware why returning to the gold standard would be a bad idea. But I've seen many people here show obvious disdain towards it. Why exactly is returning to the gold standard a bad idea?

Correct me if I'm wrong, but my understanding is that it would be a bad idea because America doesn't even begin to have enough gold to support all of its residents.
As you mention there isn't enough gold. This means that if gold was to be adopted as currency the price would increase many times. Therefore the value of a gold currency would be almost as artificial as a fiat currency.

Futhermore there is a more or less fixed amount of gold in the world. That means that there would be deflation. Deflation encourages the hoarding of currency (in this case gold) which gives more deflation and a drop in agregate demand which can lead to recesions or even depressions.

When people begin spending again this leads to inflation which encourages people to spend all the money they've hoarded which leads to a temporary spending spree and high inflation.

In sumery a gold standard leads to a quite unstable currency value with a tendency towards deflation (which as mentioned is highly damaging).

A fiat currency on the other hand will, under a sensible monetary policy, lead to a small and steady inflation which encourages people to either spend or invest their money.