But let's put aside the battle of opinions of whether inflation or deflation is more damaging for the sake of this article.
A gold currently would create equilibrium in the market for supply and demand of goods and services. There would be a predictable quantity of money in the system at all times and people, businesses, and investors would be able to base their decisions on this. There would be neither rapid deflation nor inflation, but rather the true value of the good or service would be reflected in the price. We would only see deflation if production became more affordable, or if demand decreased. This is healthy!
The argument that people would delay their purchases because they know it will be more affordable in the future is bunk. There are a few goods and services that have become consistently more affordable over time despite inflation, and people continue to buy those things knowing full well they'll be available for cheaper in the future. This is an easy to understand example of equilibrium between supply and demand.
But nonetheless, did a gold standard lead to a deflationary spiral all the way through the 1900s until 1971 when Nixon essentially declared economic bankruptcy and took us off the gold standard? No, it didn't. Those were some of the most prosperous times this world has ever seen. True economic prosperity not fueled through ever greater sums of debt.
Sad to see economic nonsense like "central banks have mitigated the effects of inflation" and "paper currency can fight the tough impact of deflation".
Deflation, actually, is good for the economy because it lowers the cost of expansion for businesses, and makes everyones savings have more purchasing power, making everyone wealthier.
Governments, however, like to spend without regard for responsibility, and so governments put out propaganda to try and scare us about "Deflation" as a threat so that people ignore the fact that most productivity and many technological advancements that we should be reaping the benefits of, are instead, "mitigated" by inflation.
Deflation, actually, is good for the economy because it lowers the cost of expansion
Wow, talk about economic nonsense. Deflation is far, far worse for the economy than inflation because it lowers the incentive to put existing capital to use.
and makes everyones savings have more purchasing power, making everyone wealthier.
Except those who have no savings or even debt, i.e. most people. And no, that's not their fault and debt-slavery their justly deserved punishment decreed by god. Inflation is pretty much the only thing that mitigates the aggregation of all wealth in the hands of a tiny group of people.
Yes, please don't say economic nonsense. What you are giving me here is political ideology, not economics. Your claims are easily disproven. The period of Americas greatest economic growth, where we went from backwards colonies to economic leader is a period of deflation! From the late 1780s to around 1910- the dollar appreciated in purchasing power due to deflation and we had the industrial revolution. All that extra productivity from machines manned prices go down and gave people more money to spend, and contrary to the claim that it prevents investment, more purchasing power means more capital to deploy.
I have ot laugh at the absurd claim that inflation is good because people have no savings to benefit from deflation. The reason they have no savings is that your lot have stolen them via inflation!
Only if government is fiscally irresponsible would deflation be bad. If they operated responsible, deflation would mean they could offer more services with the same tax rates as last year.
For banks, they would have less income from lending, but realize that overal economic growth would be muc higher giving banks more money to lend out and more customers in a position of being able to borrow for economic growth because the economy would be more stable.
Prior to the founding of the federalvreserve, it took wars to underne the economy. Now we have a boom and bust cycle that benefits government and their insiders, buturts the economy.
But let's put aside the battle of opinions of whether inflation or deflation is more damaging for the sake of this article.
A gold currently would create equilibrium in the market for supply and demand of goods and services. There would be a predictable quantity of money in the system at all times and people, businesses, and investors would be able to base their decisions on this. There would be neither rapid deflation nor inflation, but rather the true value of the good or service would be reflected in the price. We would only see deflation if production became more affordable, or if demand decreased. This is healthy!
The argument that people would delay their purchases because they know it will be more affordable in the future is bunk. There are a few goods and services that have become consistently more affordable over time despite inflation, and people continue to buy those things knowing full well they'll be available for cheaper in the future. This is an easy to understand example of equilibrium between supply and demand.
But nonetheless, did a gold standard lead to a deflationary spiral all the way through the 1900s until 1971 when Nixon essentially declared economic bankruptcy and took us off the gold standard? No, it didn't. Those were some of the most prosperous times this world has ever seen. True economic prosperity not fueled through ever greater sums of debt.
Gold is sound currency.