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Your first sentence seems to imply that losing the gold peg had no impact on the real economy, yet, your edit points to the contrary. Although establishing a cl
by josu 6y ago
Your first sentence seems to imply that losing the gold peg had no impact on the real economy, yet, your edit points to the contrary. Although establishing a clear causality isn't easy, intuitively it seems that leaving the gold standard did have an impact on prices.
>Economics may well be the dismal science, but it is luminary enough to instruct us that restoring gold convertibility to the US dollar has zero chance of solving problems such inequality and government budget deficits.
Your last sentence is pretty loaded. "Solving" those "problems" would imply that, first, they are indeed "problems" that need solving, and second, that there is actually a way to "solve" them. Some people just think that the world would be a better place if governments don't have control over the currency. No need to "solve" the world, just make it a little bit better (or less worse).
- hyko 6y agoThat's the thing though, there was plenty of inflation while on the "gold peg", e.g. 4.19% in 1968 alone. You could make the argument that central banks have done a better job of controlling inflation since making it a specific target. They could probably reduce the target close to zero with better financial technology in the future. The wtf 1971 site presents national debt and growing inequality as problems created by coming off the gold standard, I'm saying that if you do think those things are problems, pegging your currency to gold won't resolve them. Something like a government budget deficit cannot effectively be solved with monetary policy; they have to borrow their money just like everyone else (apart from a few special emergency arrangements). Reducing wealth inequality requires a broad range of policies, from education to taxation. the world would be a better place if governments don't have control over the currency I have a lot of sympathy for anarcho-capitalist schemes, and of course private money predates central bank money so that would be nothing new. There's no economic reason why a country should necessarily form an optimum currency area. So I'd be happy with that, so as long as we don't just peg it to some arbitrary thing. The value of all money lies inside minds and not mines.
- josu 6y agoThanks for your reply.
- RC_ITR 6y agoI think we are all maybe ignoring the fact that the 1970's was the period when Saudi Arabia nationalized Aramco & The US lost pricing power over oil....