<i>The limited supply of gold can also be a hindrance, causing systemic deflation as an economy grows.</i><p>Nope. The initial supply isn't what matters. With a fixed-supply currency (well-approximated by gold), the demand for money increases as an economy grows, so (for fixed supply) its price increases as well. Hence, no deflation.<p>Intuitively, the money supply must increase as an economy grows. Intuitively, clocks tick just as fast at sea level as they do on top of Everest. Intuition is often wrong.<p>Einstein can help you re-tune your clock-ticking intuition
(<a href="http://en.wikipedia.org/wiki/Gravitational_time_dilation" rel="nofollow">http://en.wikipedia.org/wiki/Gravitational_time_dilation</a>). Rothbard can help you with money (<a href="http://mises.org/money.asp" rel="nofollow">http://mises.org/money.asp</a>).