The Federal Reserve claims that one of its primary objectives is to stabilize prices. In this, of course, it has failed miserably. The irony, however, is that maintaining stable prices is the easiest thing in the world. All we have to do is stop tinkering with the money supply and let the free market do its job. Prices become automatically stable under a commodity money system, and this is particularly true under a gold standard.
The free market, if unfettered by politicians and money mechanics, will always maintain a stable price structure which is automatically regulated by the underlying factor of human effort. The human effort required to extract one ounce of gold from the earth will always be approximately equal to the amount of human effort required to provide the goods and services for which it is freely exchanged.
Gold prices haven't reached their full increases yet because those who have access to Fed notes without working for them don't have to worry as yet about hyperinflation and they aren't buying all the gold they want in order to maintain survival of the system through faith in the fed notes among those who have to earn their money and bear cumulative the inflation. But at the right time expect gold to soar as holders of fed notes start to panic. The dramatic rise in wages between 1913 and 1990 was offset totally by increases in gold prices with the exception of a 1 per cent per year annual increase in real purchasing power, which resulted from improvement in technology. There are no central banks or other human institutions which could even come dose to providing the stability of gold as a measure of value. Keynes once dismissed gold as a "barbaric metal." Many followers
of Keynes today are heavily invested in gold. It is entirely possible, of course, that something other than gold would be better as the basis for money. It's just that, in over two thousand years, no one has been able to find it.