Posted by
Andrews on Tuesday, December 01, 2009 5:26:55 PM
Either tonight or tomorrow I hope to write Bad Economics Part 7 "What is Inflation". But, until I do so, I want to put a few questions forward to all those who argue that gold is anacrhonistic and dangerous. First, if gold is inferior to paper money, why did the worst depression in US history take place after we moved to a central bank, and persisted despite a rapid move to a de facto fiat currency? Why was hyperinflation only recorded in history after the creation of both paper currency and central banking? Why are recessions a regular feature of fiat currency, while only recorded of gold standard ages when the currency was intentionally debased? Why does central banking go hand in hand with the boom-bust cycle? Why are the ills of fiat currency and central banking always minimized while gold is not only blamed for the most trivial failings, but even for imaginary problems?
And finally, what is the benefit of fiat currency and central banking that makes up for the regular boom-bust cycle, the periodic massive recessions and the constant erosion of savings through inflation? And what is it about gold that scares so many?
Hopefully I will be able to answer some of these in y post when I describe, honestly, what inflation is, why inflation is a specifically modern problem, what we need to do to end it, and why the government and big government apologists will fight tooth and nail to avoid doing so, as well as why they so strongly denounce gold.
If you want a preview of some of these arguments, read "
Why Gold?", otherwise, check back shortly and read my latest installment in the "Bad Economics " series.