Gold Standard, yea or nea?

Great Debates
121

This has been a fascinating thread. A few thoughts that occur to me:

On inflation v. deflation: In a system with predictable inflation both borrowing and investing are rewarded. In a deflationary system you will often do better to hold onto your money as cash instead of investing in a business via stocks or bonds. If you are trying to start a business then it will cost you more to borrow money, so you will probably delay and save to finance instead. Together these effects would stifle growth of the real economy.

On the gold (or any other mineral) standard: As many others have mentioned, prices would fluctuate greatly if gold became more or less available. But besides the usual, like finding new deposits or using old ones up, there are more ways to use gold now. If the next generation of electronics needs gold instead of aluminum or copper in the chips and the consumption of gold increases by a factor of 8 over the next four years, what happens to the price of apples?

Jonathan

122

The phrase “in favor of” means the opposite of what you apparently think it does.

123

Funny thing: In the late 19th Century, economic populists who were maniacally suspicious of bankers and the financial sector were against the gold standard, and favored a silver-based currency precisely because it would be more inflationary. See Free Silver.

124

I do believe you whooshed yourself, as it seems pretty evident to me the poster was not approving of either said politician or the policy, but speaking to the motivating force.

125

I know; just wanted to put that on the record.