That’s not what that proves lol, but it does prove that the gold standard does not work and is not sustainable.
You should probably read up a little bit on history, the facts disagree with you. The US government had to use regulations and policies to influence the supply of gold: grants for gold mining, setting the reserve rates, hoarding gold to keep out of circulation. Until the gold standard dropped, there was even a limit on the amount of gold one could legally own. On top of this, other gold producing nations had the power to directly influence US monetary value and undermine US sovereignty.
Throw in implications and challenges of being a global reserve currency (Triffin dilemma), and you end up having a really bad time with an unhealthy economy.
Foolish people that don’t know history want to pretend that the gold standard magically creates some kind of natural currency free of “government meddling”, but the reality is that even more meddling and government control was required under the gold standard than compared to fiat currency.
That’s not what that proves lol, but it does prove that the gold standard does not work and is not sustainable.
If the economy grew at the rate of mining pre1976 and had no relationship post1976 then your hypothesis would be proven. Data shows this is false.
Yes the FED wanted full control over the US money supply, which is impossible under the gold standard. This desire was unrelated to inflation or deflation.
If the economy grew at the rate of mining pre1976 and had no relationship post1976 then your hypothesis would be proven.
Ahhh! I understand what you are misunderstanding, now. You think that I said that the change in size of the pool of currency IS the change in the size of the economy itself. Here’s what I said:
The total pool of currency needs to be able to grow with the economy.
The pool of currency and the economy are two separate things that can grow at two separate rates. It just creates serious economic problems when they are not aligned with each other. Homework assignment: read up on the Great Depression.
If it is true that total pool of currency needs to be able to grow with the economy then the rate one variable grows must be linked to the rate the other grows. If there is no link then there is no relationship.
The great depression was caused by a stock market over inflated with leverage. This has nothing to do with the gold standard.
And notice how we have deviated from the topic of deflation. It’s a topic built on myth and misunderstanding that easily slips out of focus.
There is absolutely no evidence that deflation itself is bad. The great depression occurred because there was too much debt. Japan suffered in the 90s because it had too much debt. Deflation/inflation just measures who gains more over time, debtors or lenders.
If it is true that total pool of currency needs to be able to grow with the economy then the rate one variable grows must be linked to the rate the other grows.
You’re just repeating the same mistake. We both agree this is not true, as in the economy can grow while the currency pool stays constant. They change independent from each other. It’s just really bad when they both don’t grow on a similar scale. They only need to grow at the same rate in order to maintain a healthy growing economy. The relationship/link between them is that when they get too out of sync, there will be a correction.
The great depression was caused by a stock market over inflated with leverage. This has nothing to do with the gold standard.
Kind of wild that you can admit that the worst economic downturn of all history was caused by debt, that deflation and inflation impact the way debt works, and in the very same paragraph say that “There is absolutely no evidence that deflation itself is bad.” without a shred of self-reflection or irony. So, you understand that debt causes depressions, but simultaneously think an economic force that amplifies debt is totally harmless?? Make it make sense!!
During World War I, many countries suspended their gold standard in varying ways
It’s in the first line. The cause here is WWI, not the great depression. These are countries going broke and abandoning the gold standard because of war, not because they are experiencing deflation.
Exactly. The quantity of debt relative to GDP is what is of concern. You are linking to the right things. Go back, reread them and then take a long walk and have a good think.
Huh? Your reading comprehension needs some work. This is a list of causes of the Great Depression. Of course the Great Depression is not a cause of the Great Depression. The first cause of the Great Depression in the list is… (drum roll, please): the effects of the gold standard!!!
abandoning the gold standard because of war
Hmmmmmmmmmmmmmmmmmmmmmm what about war causes deflationary currency to be unsuitable? 🤔🤔🤔🤔🤔 And are those conditions exclusive to war? Checkmate. That was easy!
The conditions mean that debts cannot be repaid. Thats the fear. Not because the gradual increasing purchasing power of the underlying currency that actually benefits the bondholders.
That’s not what that proves lol, but it does prove that the gold standard does not work and is not sustainable.
You should probably read up a little bit on history, the facts disagree with you. The US government had to use regulations and policies to influence the supply of gold: grants for gold mining, setting the reserve rates, hoarding gold to keep out of circulation. Until the gold standard dropped, there was even a limit on the amount of gold one could legally own. On top of this, other gold producing nations had the power to directly influence US monetary value and undermine US sovereignty.
Throw in implications and challenges of being a global reserve currency (Triffin dilemma), and you end up having a really bad time with an unhealthy economy.
Foolish people that don’t know history want to pretend that the gold standard magically creates some kind of natural currency free of “government meddling”, but the reality is that even more meddling and government control was required under the gold standard than compared to fiat currency.
If the economy grew at the rate of mining pre1976 and had no relationship post1976 then your hypothesis would be proven. Data shows this is false.
Yes the FED wanted full control over the US money supply, which is impossible under the gold standard. This desire was unrelated to inflation or deflation.
Ahhh! I understand what you are misunderstanding, now. You think that I said that the change in size of the pool of currency IS the change in the size of the economy itself. Here’s what I said:
The pool of currency and the economy are two separate things that can grow at two separate rates. It just creates serious economic problems when they are not aligned with each other. Homework assignment: read up on the Great Depression.
If it is true that total pool of currency needs to be able to grow with the economy then the rate one variable grows must be linked to the rate the other grows. If there is no link then there is no relationship.
The great depression was caused by a stock market over inflated with leverage. This has nothing to do with the gold standard.
And notice how we have deviated from the topic of deflation. It’s a topic built on myth and misunderstanding that easily slips out of focus.
There is absolutely no evidence that deflation itself is bad. The great depression occurred because there was too much debt. Japan suffered in the 90s because it had too much debt. Deflation/inflation just measures who gains more over time, debtors or lenders.
You’re just repeating the same mistake. We both agree this is not true, as in the economy can grow while the currency pool stays constant. They change independent from each other. It’s just really bad when they both don’t grow on a similar scale. They only need to grow at the same rate in order to maintain a healthy growing economy. The relationship/link between them is that when they get too out of sync, there will be a correction.
https://en.wikipedia.org/wiki/Great_Depression#Attempts_to_return_to_the_Gold_Standard Again, facts and history disagrees with you. It’s literally the very first on the list of causes lol
You’re certainly trying to, but I have not.
LOL. YES!!! DING DING DING! And how does deflation impact debt? Does it increase or decrease debt? https://en.wikipedia.org/wiki/Debt_deflation 😊
Kind of wild that you can admit that the worst economic downturn of all history was caused by debt, that deflation and inflation impact the way debt works, and in the very same paragraph say that “There is absolutely no evidence that deflation itself is bad.” without a shred of self-reflection or irony. So, you understand that debt causes depressions, but simultaneously think an economic force that amplifies debt is totally harmless?? Make it make sense!!
It’s in the first line. The cause here is WWI, not the great depression. These are countries going broke and abandoning the gold standard because of war, not because they are experiencing deflation.
Exactly. The quantity of debt relative to GDP is what is of concern. You are linking to the right things. Go back, reread them and then take a long walk and have a good think.
Huh? Your reading comprehension needs some work. This is a list of causes of the Great Depression. Of course the Great Depression is not a cause of the Great Depression. The first cause of the Great Depression in the list is… (drum roll, please): the effects of the gold standard!!!
Hmmmmmmmmmmmmmmmmmmmmmm what about war causes deflationary currency to be unsuitable? 🤔🤔🤔🤔🤔 And are those conditions exclusive to war? Checkmate. That was easy!
The conditions mean that debts cannot be repaid. Thats the fear. Not because the gradual increasing purchasing power of the underlying currency that actually benefits the bondholders.
Take a walk. Have a think.
Does deflation make debt easier or harder to repay? 🤔🤔🤔🤔
Again, an econ 101 class would really help you