This shifts wealth to those people who hold cash, a non-productive asset.
This increase real interest rates, deterring investments in productive assets.
I followed your line of reasoning until that last line. If you assume this cash is held in a bank, then these dollars are still lendable (even multiple times over, if you assume we haven't also done away with fractional reserve, along with this presumed return to a gold standard.) Or, are you assuming that these wealthy people are squirreling all their gold-backed currency away under their mattresses?
"Of course power tools and alcohol don't mix. Everyone knows power tools aren't soluble in alcohol..." -- Crazy Nigel