[cardguy]

If our currency was linked to a gold standard - would that prevent inflation from running out of control.

Indeed - it is pretty much impossible to have inflation with the gold standard?

This is a simple question and I would love a direct answer.

The reason I ask is because there is an interesting conceptual sleight of hand which took place in the 80's.

After the US dollar left the gold standard - Reagonomics (and Thatcherism in the UK) pursued goals which inflicted hurt on working people.

For example - raising interest rates in order to stamp out inflation.

Yet - I find it interesting that since currency was invented as a tool of exchange. And has now become a tool of oppression in which the demands of keeping the currency stable outweigh the demands of keeping people in work.

And if the simple decision to drop the gold standard was the cause of that - it makes for an interesting defining moment.

Where allowing bankers and governments to run up debts as fast as they wanted - came at the cost of workers having to sacrifice themselves for the sake of keeping the currency stable.

As opposed to simply applying that discipline to the workings of the currency instead via keeping it linked to a fixed measure of gold.

Indeed - with a gold standard - my understanding is that deflation was the main problem and not inflation. But I haven't researched this area much yet...

[KorbenDallas]

Falling into the old fallacy that deflation is bad....What's new. Under a gold standard, there can be inflation, sure, it depends on how fast gold is mined.

The "deflation is the worst thing ever" trope is one of the biggest cons ever pulled. Deflation actually benefits most people in the economy at the expense of the .01% (Big banks and politicians) but alas, very few slaves give a shit about economics and of the ones that do very few read Hayek and Rothbard, so, the lie continues, and the scam rolls onward.

Cue the sycophants screaming, "but but but deflation is horrible! My professor at NYU told me so! And and Paul Krugman said so! And and he won a Nobel Prize!"

I'll keep stacking my silver and we'll see who's laughing in 10 years.

[The Beast1]

There are pros and cons to both.

Our fiat money system could work if the people at the helm of the steering wheel of the Fed were not trying to benefit the small cabal of elites in that circle.

I like gold because of the lack of manipulation from that same cabal. Our fucked up system now came about from straight up manipulation of the system.

At this moment, it appears the chickens have come to roost since the Fed and Wall Street have strip mined all of the wealth out of America. The credit and derivatives system that wall street profits off of can't sustain itself any more without any actual wealth.

Deflation is a good thing and helps people at the bottom. It doesn't help people who have debt and use credit to make money.

[cardguy]

I would love to see some serious deflation. I don't have a problem with that.

We are constantly burning through high levels of inflation - that it would be fun to experience some deflation for a change. Just to see what it felt like.

As for gold. I understand that if more of it is mined - that could cause inflation to rise. But to me - that seems a lot less likely to happen that when you give politicians to print as much money as they like.

In my eyes - switching to the gold standard makes inflation a problem which is suddenly 99.9% less of an issue. And that is pretty close to never having to worry about inflation again - as far as I am concerned.

[cardguy]

The point of this thread is this simple observation.

Teh government left the gold standard.

Inflation ran out of control.

The politicians then tell the people they will have to suffer in order to bring inflation under control.

Which leaves me wondering - like - WTF??? Why not just revert to the gold standard - and stop making the people suffer just in order to protect the existence of fiat currency.

It seems a strange thing to occur that people never put two and two together in this way.

[KorbenDallas]

Inflation isn't much of an issue in a gold standard system.

If you really want to learn about the gold standard, an internet forum won't give you all the answers. You're going to have to read some books.

A short book that gives you a good introduction is Ron Paul's, "The Case for Gold". It's free and pretty short.

[jimukr104]

Most inflation and hyper inflation happened actually when on gold standard. That is one of the reasons world went off it. Since gov't's love to print money being on gold standard led to inflation.
Today inflation is a political tool. It is gov't taxation more than anything else or used to show growth. Printing of money doesn't affect it much since paper money is distributed , than pulled back and burned.

[cardguy]

Hyper inflation linked to gold standard?

Really?

Germany and Zimbabwe come to mind. And they were not on the gold standard during their bouts of hyperinflation.

Under the gold standard - you can swap your banknotes for a fixed amount of gold. I don't see how you can have hyperinflation under that system?

[LeBeau]

...

[lurker]

(05-17-2014 11:58 AM)KorbenDallas Wrote:  

Falling into the old fallacy that deflation is bad....What's new. Under a gold standard, there can be inflation, sure, it depends on how fast gold is mined.

The "deflation is the worst thing ever" trope is one of the biggest cons ever pulled. Deflation actually benefits most people in the economy at the expense of the .01% (Big banks and politicians) but alas, very few slaves give a shit about economics and of the ones that do very few read Hayek and Rothbard, so, the lie continues, and the scam rolls onward.

Cue the sycophants screaming, "but but but deflation is horrible! My professor at NYU told me so! And and Paul Krugman said so! And and he won a Nobel Prize!"

I'll keep stacking my silver and we'll see who's laughing in 10 years.

Deflation does not benefit most people in the economy at the expense of the .01%. Deflation harms debtors, as they have to pay back set-denominated debt with currency that's worth more and in smaller supply than when they took out the loans. Debt deflation occurred on a massive scale to American farmers in throughout the 1930s, and is considered one of the liquidity traps that severely prolonged the Great Depression.

Have student loans? Business loans? A mortgage? Car loan? Credit card debt? Deflation is bad for you. Are you in the business of making loans? Deflation would be good for you, except that your debtors will default and screw you.

[vinman]

If I'm not mistaken the United States experienced deflation throughout the 1800's.

[Katatonic]

(05-17-2014 12:27 PM)jimukr104 Wrote:  

Most inflation and hyper inflation happened actually when on gold standard. That is one of the reasons world went off it. Since gov't's love to print money being on gold standard led to inflation.
Today inflation is a political tool. It is gov't taxation more than anything else or used to show growth. Printing of money doesn't affect it much since paper money is distributed , than pulled back and burned.

You're right only because the Bretton Woods system was technically a gold standard, albeit a bastardized version of the gold standard. France had a run on US gold after the government inflated the currency, part of which was used in the unnecessary Marshall Plan.

[Katatonic]

(05-17-2014 08:33 PM)vinman Wrote:  

If I'm not mistaken the United States experienced deflation throughout the 1800's.

The entire 1800's was basically a deflationary period for the US. Even today we experience deflation in the consumer markets. The capabilities of a $500 computer today would have cost $2,000 four years ago.