4 ms·

Producing (that is, discovering and bringing to market) new gold is incredibly time consuming and hard. Printing trillions of dollar bills on high speed presse

Producing (that is, discovering and bringing to market) new gold is incredibly time consuming and hard. Printing trillions of dollar bills on high speed presses with no value to back them up is very easy. So the difficulty of getting gold makes inflationary policies impossible by central governments. There is no way to magically come up with 2 trillion dollars of new gold in a few months. You can, however, with the printing presses. This is why gold provides a reality link to the value of our money. The value of the actual paper that money is printed on is virtually nothing.

Retric 17y ago
The value of the paper money is related to the economic harm that devaluing it would cause the government which issues it. This is why it the USD has been as stable as it has over such a long time. The other problems with gold is you often have deflationary pressure as when it's value increases (which is unbelievably bad) and inflation whenever large new supply's come on line. Also once you start using gold as a currency it becomes far more expensive to use it for other things like a non corrosive conductor.
- gibsonf1 17y ago
  The problem is that you are comparing inflation/deflation in amazingly small amounts with gold (given the reality connection to actually having to have gold in your hands mined from the ground) to the radical change you get with paper which is happening right now as the printing presses are running 24/7 at amazing speeds. Watch the hyper inflation we get next year and tell me how that could have happened with gold?
  - Retric 17y ago
    I would, bet you 1000$ (or an ounce of gold) that we will not see hyper inflation or even significant inflation (15%+/year) next year. Also, due to the increase in global weath every year we need a currency that increase in supply to keep up. Otherwise you get deflation which can happen with gold and distroyes the ability to lend and borrow. Not to mention the fact that their is not enough gold in the world to replace the USD without dramaticly increasing it's value. PS: You can also see significant inflation with gold for a long term historical example look at spain after the new world.

Retric 17y ago

The value of the paper money is related to the economic harm that devaluing it would cause the government which issues it. This is why it the USD has been as stable as it has over such a long time. The other problems with gold is you often have deflationary pressure as when it's value increases (which is unbelievably bad) and inflation whenever large new supply's come on line. Also once you start using gold as a currency it becomes far more expensive to use it for other things like a non corrosive conductor.

gibsonf1 17y ago
The problem is that you are comparing inflation/deflation in amazingly small amounts with gold (given the reality connection to actually having to have gold in your hands mined from the ground) to the radical change you get with paper which is happening right now as the printing presses are running 24/7 at amazing speeds. Watch the hyper inflation we get next year and tell me how that could have happened with gold?
- Retric 17y ago
  I would, bet you 1000$ (or an ounce of gold) that we will not see hyper inflation or even significant inflation (15%+/year) next year. Also, due to the increase in global weath every year we need a currency that increase in supply to keep up. Otherwise you get deflation which can happen with gold and distroyes the ability to lend and borrow. Not to mention the fact that their is not enough gold in the world to replace the USD without dramaticly increasing it's value. PS: You can also see significant inflation with gold for a long term historical example look at spain after the new world.