Btw .. it is not something I have discovered.. the reason Nixon was forced to unpeg dollar from gold was exactly the same .. people can still adjust to high prices of commodities.. but they can't take in massive swings in the prices ..
Gold pegged currencies - which follow free market hypothesis - are very inefficient in controlling price swings .. that is exactly why Fed function is very important .. not to say Fed can't be improved .. there are ton of opportunities to improve ... But the function itself can't be eliminated