I saw John Nash present his ideas on commodity-basket money (money that can be exchanged for a defined basket of commodities, e.g., an ounce of gold, barrel of oil, pound of tin, and a cord of wood) at the Southern Economic Association meetings a few years ago, a talk in which he credited Hayek as a forerunner. One person, during the Q&A, said that commodity had been "tested" and failed -- during the era of the gold standard, he claimed, the economy exhibited larger boom-and-bust cycles than it has with fiat money since.
Now, I don't want to claim that gold is an "objective" "measure" of value -- money doesn't measure anything, and all value is subjective -- but it just struck me that the change in question is as if a person, troubled by the fluctuations in his weight, decided that the solution was to get a scale that varied in the opposite direction of his bulk! When a recession hits, the government pumps fiat money into the economy, and then proclaims that recessions, as "measured" by the amount of that fiat money that changes hands, are milder than when they had been measured in terms of a money whose value the government could not arbitrarily alter. Now isn't that something to write home about?