Under the gold standard, a system many major economies operated under for significant stretches between the nineteenth and twentieth centuries, a country's currency was directly convertible into a fixed weight of gold — anyone holding that country's paper currency could, in principle, exchange it for a corresponding fixed amount of physical gold at a government-guaranteed rate. Because of that fixed convertibility, a country's total money supply was directly tied to how much gold it actually held in reserve, meaning the country's central monetary authority couldn't simply print substantially more currency than its own gold reserves could reasonably back.
A built-in discipline against printing money freely
The gold standard's most commonly cited advantage was the monetary discipline it imposed automatically: because a government's currency issuance was constrained by its actual physical gold reserves, it couldn't simply expand the money supply freely to cover its own spending the way a government operating under a purely fiat currency system, unconstrained by any such physical backing, more easily could. This built-in constraint tended to keep inflation more consistently in check over the longer run under the gold standard than many later purely fiat currency periods have managed, since expanding the money supply required first acquiring more actual physical gold, not simply a political decision to print more currency.
But that same rigid discipline made economic downturns harder to fight
That same rigid discipline came with a serious practical drawback: a government operating under the gold standard had very limited ability to expand its money supply flexibly in response to a genuine economic downturn, since doing so required more physical gold reserves the country might simply not have readily available, regardless of how genuinely necessary a more flexible monetary response might otherwise have seemed during a serious crisis. The system also tied a country's money supply to essentially the arbitrary outcome of gold mining and discovery, rather than to the country's own actual underlying economic activity — a major new gold discovery could suddenly expand a country's money supply and contribute to inflation, while a period of comparatively slow gold discovery could constrain a growing economy's money supply well below what its own expanding real economic activity might otherwise have called for, tying a country's monetary policy tightly to a fundamentally unrelated physical resource rather than to its own economic conditions.
What we're still unsure about
The basic mechanics of the gold standard, its genuine inflation-restraining effect, and its serious inflexibility during economic downturns are all well-documented, extensively studied monetary history. What remains more genuinely, actively debated among economists and economic historians is exactly how much the gold standard's specific structural rigidity contributed to worsening major historical economic crises, most prominently the Great Depression, relative to other contributing factors operating at the same time — economic historians differ in how much causal weight they assign to the gold standard itself, as opposed to other contemporaneous policy choices and structural economic factors, a genuinely unresolved historiographical debate rather than a fully settled consensus.
This sits inside The Gold Standard & Monetary Systems, one of seven topics in Economic History, one of seven domains in History, one of seventeen subjects the app can quiz you on.