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I have taken econ 101, this wasn't covered. Deflation via credit default has shown to be harmful to wider economy 2x times in US history (monetary shocks). I

I have taken econ 101, this wasn't covered. Deflation via credit default has shown to be harmful to wider economy 2x times in US history (monetary shocks). I am not aware of any conclusive study that a deflationary currency is bad for investment and progress. The easy counterpoint is Gold, which is often deflationary (when economic growth outpaces gold mining). We have had 10k years of investment that have shown your basic statement is false (deflationary currency causes investment to grind to a halt). Inflationary fiat or credit based currency is a relatively new invention (1972 in the US). I have not seen any serious analysis showing that real investment has radically improved since going off the gold standard. Real investment has been growing for decades as real wealth increases, inflationary currency hasn't changed that very much AFAIK.

nerfhammer 8y ago
> Inflationary fiat or credit based currency is a relatively new invention (1972 in the US) The dollar has been fiat since the 1930s. The gold standard from 1933-1972 was essentially in name only.
- jpadkins 8y ago
  https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system 45-72 was bretton woods era which was still fixed price to gold. It was only after 1972 that the value was allowed to be free floating, not tied to an amount of gold https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock
  - jonknee 8y ago
    Did you miss the "essentially in name only" part? It was fixed to gold, but they also fixed the price of gold by outlawing [1] people from owning it! When they wanted to deflate the USD they just raised the price of gold [2]. It was a crude fiat system. [1] https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 [2] https://en.wikipedia.org/wiki/Gold_Reserve_Act https://en.wikipedia.org/wiki/Gold_Reserve_Act

nerfhammer 8y ago

> Inflationary fiat or credit based currency is a relatively new invention (1972 in the US) The dollar has been fiat since the 1930s. The gold standard from 1933-1972 was essentially in name only.

jpadkins 8y ago
https://en.wikipedia.org/wiki/Bretton_Woods_system https://en.wikipedia.org/wiki/Bretton_Woods_system 45-72 was bretton woods era which was still fixed price to gold. It was only after 1972 that the value was allowed to be free floating, not tied to an amount of gold https://en.wikipedia.org/wiki/Nixon_shock https://en.wikipedia.org/wiki/Nixon_shock
- jonknee 8y ago
  Did you miss the "essentially in name only" part? It was fixed to gold, but they also fixed the price of gold by outlawing [1] people from owning it! When they wanted to deflate the USD they just raised the price of gold [2]. It was a crude fiat system. [1] https://en.wikipedia.org/wiki/Executive_Order_6102 https://en.wikipedia.org/wiki/Executive_Order_6102 [2] https://en.wikipedia.org/wiki/Gold_Reserve_Act https://en.wikipedia.org/wiki/Gold_Reserve_Act