SimonS

Which Inflation Is It Anyway?

JasonC - If money is to be used as a store of value, its supply should correlate with the amount of goods and services in the economy. Otherwise, you would get an imbalance that triggers price increases because it has been devalued (think of what's happening in Zimbabwe.) In gold standard, price actually decreases as new goods and services get created with virtually constant money supply.

You can still borrow money in a full-reserve banking system. It's just that the lender cannot withdraw the money in exchange of interests until the debt gets repaid. In contrast, fractional reserve banking system can lend out up to 90% of deposits which is equivalent to expanding the money supply 10 times.