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This. Currencies function well when they grow in-line with the growth in the economies they serve. When they fail to do so, people become reticent to actually
by secabeen 13y ago
This. Currencies function well when they grow in-line with the growth in the economies they serve. When they fail to do so, people become reticent to actually use them in commerce, which increases hoarding, increasing theoretical value, but reducing actual utility.
- broolstoryco 13y agocould you please point me to any theories or papers that discuss this? (genuinely curious)
- secabeen 13y agoThere are some citations in the Disadvantages Section of the Gold Standard article on Wikipedia: http://en.wikipedia.org/wiki/Gold_standard#Disadvantages http://en.wikipedia.org/wiki/Gold_standard#Disadvantages
- bunderbunder 13y agoRead up on the theory around liquidity traps. It's not a popular idea among certain schools of economists, but it is a pretty mainstream idea.