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The link below suggests that you're right---the price of gold was remarkably steady for at least the second half of the 1800s. http://www.nma.org/pdf/gold/his_

by chwahoo 16y ago

The link below suggests that you're right---the price of gold was remarkably steady for at least the second half of the 1800s. http://www.nma.org/pdf/gold/his_gold_prices.pdf http://www.nma.org/pdf/gold/his_gold_prices.pdf Why would the price have been so steady? Was the supply of gold increasing at just the right rate to keep it steady (unlikely) or was the economy so much less efficient at the time that prices didn't tend to fluctuate as they should (my guess). Perhaps the government played a role by owning a massive amount of gold? I don't think any of these explanations would apply to bitcoin (or gold, now). Is there a better explanation? (and does it also apply to bitcoin?)

gwern 16y ago
From Gregory Clark's _Farewell to Alms_: > However, in preindustrial England, and indeed in many preindustrial economies, inflation rates were low by modern standards. Figure 8.7 shows the English inflation rate from 1200 to 2000 over successive forty-year intervals. Before 1914 inflation rates rarely exceeded 2 percent per year, even in the period known as the Price Revolution, when the influx of silver from the New World helped drive up prices. In a country such as England, which had a highly regarded currency in the preindustrial era, the crown did not avail itself of the inflation tax, despite the close restrictions Parliament placed on its other tax revenues. Only in the twentieth century did significant inflation appear in England. By the late twentieth century annual inflation averaged 4–8 percent per year. Thus there has been a decline, not an improvement, in the quality of monetary management in England since the Industrial Revolution. > > ...Thus in Roman Egypt wheat prices roughly doubled between the beginning of the first century AD and the middle of the third.[12] But that reflects an inflation rate of less than 0.3 percent per year. I submit that it is unlikely that any of your explanations would operate over most of England's post-Invasion history and also in Roman Egypt a millennium before.
- mike_esspe 16y ago
  I couldn't find the data right now, but if i'm not mistaken, long term there was deflation, not inflation (though there were fluctuation due to wars and influx of precious metals from New World). E.g. compare 1800 with 1900 with the help of CPI: http://www.measuringworth.com/calculators/ppowerus/ http://www.measuringworth.com/calculators/ppowerus/
mike_esspe 16y ago
You are looking on the wrong numbers, dollar was fixed to gold, so no surprise, that its price is stable. You should measure how many services and products 1kg of gold can buy you.

by chwahoo 16y ago

gwern 16y ago

From Gregory Clark's _Farewell to Alms_: > However, in preindustrial England, and indeed in many preindustrial economies, inflation rates were low by modern standards. Figure 8.7 shows the English inflation rate from 1200 to 2000 over successive forty-year intervals. Before 1914 inflation rates rarely exceeded 2 percent per year, even in the period known as the Price Revolution, when the influx of silver from the New World helped drive up prices. In a country such as England, which had a highly regarded currency in the preindustrial era, the crown did not avail itself of the inflation tax, despite the close restrictions Parliament placed on its other tax revenues. Only in the twentieth century did significant inflation appear in England. By the late twentieth century annual inflation averaged 4–8 percent per year. Thus there has been a decline, not an improvement, in the quality of monetary management in England since the Industrial Revolution. > > ...Thus in Roman Egypt wheat prices roughly doubled between the beginning of the first century AD and the middle of the third.[12] But that reflects an inflation rate of less than 0.3 percent per year. I submit that it is unlikely that any of your explanations would operate over most of England's post-Invasion history and also in Roman Egypt a millennium before.

mike_esspe 16y ago
I couldn't find the data right now, but if i'm not mistaken, long term there was deflation, not inflation (though there were fluctuation due to wars and influx of precious metals from New World). E.g. compare 1800 with 1900 with the help of CPI: http://www.measuringworth.com/calculators/ppowerus/ http://www.measuringworth.com/calculators/ppowerus/

mike_esspe 16y ago

You are looking on the wrong numbers, dollar was fixed to gold, so no surprise, that its price is stable. You should measure how many services and products 1kg of gold can buy you.