Steven Hales

The Economic Policies of Failure

On Dec 11 03:16 PM moonbat1775 wrote:

> "We could go back to Herbert Hoover or even further before the Federal
> Reserve Act, but do we want to?" - Steven H.
>
> Nope. It turns out the problem has been a false choice between a
> dishonest/unstable but fast money system (FRB) and an honest/stable
> but slow money system (100% reserve gold standard).

This is a false dichotomy. Mediums of exchange whether they be gold or fiat currencies are only valuable for what they can be exchanged. Golds value fluctuates through time and is not stable. Simply fixing the unit of exchange to such a standard will prevent central bank flexibility.

> There are alternative monies that are 100% honest and that will outperform
> FRB in all but the short run as you would expect when the honest
> compete against the dishonest.
> The solution is two step:
> 1. Move from dishonest/unstable FRB to 100% reserve gold standard.
> This will stabilize the stock market. Now we are at honest/stable/slow.
>
> 2. Move from honest/stable/slow (100% gold standard) to 100% reserve
> equity backed monies (notice plural). We would then be at honest/stable/high
> performance. The market as a whole would only move up. The market
> would then be separate forever from the threat of FRB deflation.

This is just silly. If a country adopts a gold standard and If demand for gold increases thereby increasing its price then the only solution is a deflation in price of all goods and services to keep gold's price from rising. Gold is not mystical or even practical as a medium of exchange or peg of value, it is an industrial metal subject to the same forces of supply and demand as any other commodity.