Just to clarify, I wasn't suggesting that a Central Bank (using fiat currency) should punish bad actors; I was suggesting that if the Central Bank used Gold, the bad actors may not have existed, or if they did exist, would have been decimated to the point they are essentially replaced by better actors.
I'm not saying that the GFC and huge Government debt are the fault of the Central Banks, but they are much more likely to occur because the Central Bank uses a fiat currency. If we had a gold-standard and the Government issued huge amounts of debt, eventually they would run out of creditors who trusted them, and they would be forced to change spending habits.
Sure a gold standard is more punishing, and eventually that may force people into better behavior, but by then it may be too late, and you'd be losing out to any country that does bail out their banks. There are always going to be instances in which individual actors don't care about the institutions they're a part of, and the institution isn't guaranteed to catch this bad behavior. For example, plenty of analysts knew that they were screwing over the banks that employed them by buying unsustainable CDOs, but they didn't care because they were making crazy bonuses. Meanwhile, all the C-suite sees is that their underlings making money by buying AAA rated bonds. There's no reason to believe that would have been prevented with a gold standard, just as the Great Depression wasn't.
The countries that would lose out would be the ones that used fiat because they are more likely to have a GFC, whilst the gold standard countries stay more stable via the mechanism I theorized before.
And if the C suit have such little control that their employees can collapse their company, they are simply incompetent and their losses should not be socialised.
I'm not saying that the GFC and huge Government debt are the fault of the Central Banks, but they are much more likely to occur because the Central Bank uses a fiat currency. If we had a gold-standard and the Government issued huge amounts of debt, eventually they would run out of creditors who trusted them, and they would be forced to change spending habits.