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> History teaches us that inflation will continue as long as the government keeps printing fiat money with no backing. You do realize that the US has had fiat

> History teaches us that inflation will continue as long as the government keeps printing fiat money with no backing. You do realize that the US has had fiat money for decades, right? Including our longest period of low inflation, a run of nearly 4 decades. So it would seem history teaches us the opposite. "For every complex problem there is an answer that is clear, simple, and wrong." -- H. L. Mencken

WalterBright 4y ago
> You do realize that the US has had fiat money for decades, right? Yes, since 1914 when the US switched to fiat money. > Including our longest period of low inflation, a run of nearly 4 decades The US had zero net inflation from 1800 to 1914. How much net inflation do you think happened in those 4 decades? What would a 1914 US dollar be worth today? I'll help you out. $29.92 https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/
- wpietri 4y ago
  > The US had zero net inflation from 1800 to 1914. This is just absurd. Not only is this a period so different than a modern economy that it's not useful for comparison, but during that period it was a roller coaster of inflation and deflation, both of which are terrible for people. Those curious can see the volatility here: https://commons.wikimedia.org/wiki/File:US_Historical_Inflation_Ancient.svg https://commons.wikimedia.org/wiki/File:US_Historical_Inflat...
  - WalterBright 4y ago
    > This is just absurd. Not only is this a period so different than a modern economy that it's not useful for comparison, I hear that a lot. Nobody is ever able to explain what law of economics changed in 1914. The Law of Supply & Demand was just the same as it always was. > but during that period it was a roller coaster of inflation and deflation, both of which are terrible for people. Those curious can see the volatility here: https://commons.wikimedia.org/wiki/File:US_Historical_Inflat https://commons.wikimedia.org/wiki/File:US_Historical_Inflat... All of the spikes were the result of the US government meddling with the economy (such as bimetalism and other nonsense, see Friedman's "Monetary History of the United States"). Except for the big one, coincidentally coincident with the California gold rush. Or is that a coincidence? Tons of gold flooding into the economy, what would the consequence of that be? Hmmm.
    - wpietri 4y ago
      This is a straw man: > what law of economics changed in 1914 Again, you're just ignoring the fact that our most stable period of low inflation was under fiat money. And that wasn't just true here. Central banks with well-managed money supplies brought price stability to many countries. I understand that goldbuggery is a religion, which like many religion requires ignoring inconvenient facts. You're welcome to keep proselytizing, but if you do, I'll take my leave.
      - WalterBright 4y ago
        > the fact that our most stable period of low inflation was under fiat money. And that wasn't just true here. Central banks with well-managed money supplies brought price stability to many countries. Milton Friedman in "Monetary History of the United States" shows with graphs and charts that the instability was higher under the stabilizing hand of the Fed. What the Fed brought was an upward bias to it. > I understand that goldbuggery is a religion All I'm pointing out is the true cause of inflation. The voodoo is all the other theories trying to deny what it is. As for stability, is that what you call the last year? All under the enlightened hand of the Fed. Prices in the supermarket have often doubled in the last year. > Central banks with well-managed money supplies brought price stability to many countries. Have they? Compared to what? Which countries since 1914 did not have a fiat money system?
        wpietri 4y ago
        Ah yes, the religious person cites religious texts: > Monetary History of the United States That book covers only through 1960, ending 20 years before the low-inflation era I'm talking about. Friedman retired from teaching before the era even started. So yes, I am definitely done here.
        WalterBright 4y ago
        I do enjoy the contention that the laws of economics changed in 1960. Nor does "low" inflation prove that inflation is not caused by running the printing press. And nor is "low" inflation actually low. Going through my dad's estate, I'm reminded of how much cumulative inflation there's been since 1980. A 1980 dollar is worth $3.14 in 2020. https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/
- senectus1 4y ago
  yes but in August 15, 1971 the US stopped using the gold standard. Ever since then when the Fed needs more money they just printed it. Reminds me of that scene in Douglas Adams Hitchhiker Guide to the Galaxy "“Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich. [...] "But we have also," continued the management consultant, "run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying on ship's peanut." [...] " One wonders when the defoliation stage is going to hit.
  - WalterBright 4y ago
    The US went off the gold standard in 1933. Since it was illegal to trade dollars for gold, any "gold standard" was a legal fiction.
anon291 4y ago
This is not obvious at all. 'decades' is a short term in the history of money. It is perfectly reasonable to believe that switching to fiat causes low inflation in the short term but results in long term hurt. I feel if anything, the past few years should have taught us that things that seem easy or prudent in the short term can lead to long-term issues. Why is it such a stretch to believe that about fiat. Either way I don't think 'decades' should be used as evidence that any monetary policy is good. We can reconsider if we get to centuries.

WalterBright 4y ago

> You do realize that the US has had fiat money for decades, right? Yes, since 1914 when the US switched to fiat money. > Including our longest period of low inflation, a run of nearly 4 decades The US had zero net inflation from 1800 to 1914. How much net inflation do you think happened in those 4 decades? What would a 1914 US dollar be worth today? I'll help you out. $29.92 https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/

wpietri 4y ago
> The US had zero net inflation from 1800 to 1914. This is just absurd. Not only is this a period so different than a modern economy that it's not useful for comparison, but during that period it was a roller coaster of inflation and deflation, both of which are terrible for people. Those curious can see the volatility here: https://commons.wikimedia.org/wiki/File:US_Historical_Inflation_Ancient.svg https://commons.wikimedia.org/wiki/File:US_Historical_Inflat...
- WalterBright 4y ago
  > This is just absurd. Not only is this a period so different than a modern economy that it's not useful for comparison, I hear that a lot. Nobody is ever able to explain what law of economics changed in 1914. The Law of Supply & Demand was just the same as it always was. > but during that period it was a roller coaster of inflation and deflation, both of which are terrible for people. Those curious can see the volatility here: https://commons.wikimedia.org/wiki/File:US_Historical_Inflat https://commons.wikimedia.org/wiki/File:US_Historical_Inflat... All of the spikes were the result of the US government meddling with the economy (such as bimetalism and other nonsense, see Friedman's "Monetary History of the United States"). Except for the big one, coincidentally coincident with the California gold rush. Or is that a coincidence? Tons of gold flooding into the economy, what would the consequence of that be? Hmmm.
  - wpietri 4y ago
    This is a straw man: > what law of economics changed in 1914 Again, you're just ignoring the fact that our most stable period of low inflation was under fiat money. And that wasn't just true here. Central banks with well-managed money supplies brought price stability to many countries. I understand that goldbuggery is a religion, which like many religion requires ignoring inconvenient facts. You're welcome to keep proselytizing, but if you do, I'll take my leave.
    - WalterBright 4y ago
      > the fact that our most stable period of low inflation was under fiat money. And that wasn't just true here. Central banks with well-managed money supplies brought price stability to many countries. Milton Friedman in "Monetary History of the United States" shows with graphs and charts that the instability was higher under the stabilizing hand of the Fed. What the Fed brought was an upward bias to it. > I understand that goldbuggery is a religion All I'm pointing out is the true cause of inflation. The voodoo is all the other theories trying to deny what it is. As for stability, is that what you call the last year? All under the enlightened hand of the Fed. Prices in the supermarket have often doubled in the last year. > Central banks with well-managed money supplies brought price stability to many countries. Have they? Compared to what? Which countries since 1914 did not have a fiat money system?
      - wpietri 4y ago
        Ah yes, the religious person cites religious texts: > Monetary History of the United States That book covers only through 1960, ending 20 years before the low-inflation era I'm talking about. Friedman retired from teaching before the era even started. So yes, I am definitely done here.
        WalterBright 4y ago
        I do enjoy the contention that the laws of economics changed in 1960. Nor does "low" inflation prove that inflation is not caused by running the printing press. And nor is "low" inflation actually low. Going through my dad's estate, I'm reminded of how much cumulative inflation there's been since 1980. A 1980 dollar is worth $3.14 in 2020. https://www.usinflationcalculator.com/ https://www.usinflationcalculator.com/
senectus1 4y ago
yes but in August 15, 1971 the US stopped using the gold standard. Ever since then when the Fed needs more money they just printed it. Reminds me of that scene in Douglas Adams Hitchhiker Guide to the Galaxy "“Thank you. Since we decided a few weeks ago to adopt the leaf as legal tender, we have, of course, all become immensely rich. [...] "But we have also," continued the management consultant, "run into a small inflation problem on account of the high level of leaf availability, which means that, I gather, the current going rate has something like three deciduous forests buying on ship's peanut." [...] " One wonders when the defoliation stage is going to hit.
- WalterBright 4y ago
  The US went off the gold standard in 1933. Since it was illegal to trade dollars for gold, any "gold standard" was a legal fiction.

anon291 4y ago

This is not obvious at all. 'decades' is a short term in the history of money. It is perfectly reasonable to believe that switching to fiat causes low inflation in the short term but results in long term hurt. I feel if anything, the past few years should have taught us that things that seem easy or prudent in the short term can lead to long-term issues. Why is it such a stretch to believe that about fiat. Either way I don't think 'decades' should be used as evidence that any monetary policy is good. We can reconsider if we get to centuries.