I can grow a crop or build build a house or even create a factory that build 10000 cars or a million computers ect ect ect.....ive created new wealth in the world....so the money supply representing that wealth should correspondingly increase
And also all those things as well if I just created above those things can be destroyed or they age and deteriorate and that value goes away and the money supply decrease accordingly
But all.the time this wealth is increasing and decreasing in the world....it value if tied to gold is tied to something that is static the amount of gold in the world neither increased or decreased during that entire time wealth of the world changed very dramatically
No. The money supply should remain constant (or nearly so.)
As the wealth (manufactured goods) increases, the prices for those goods will decrease. I know that's a scary prospect for those of us who've been raised on Keynesian baloney, but it shouldn't be.
You are correct that wealth lies in the goods we produce and we certainly want that production to grow. There is no reason, though, for the money we use to exchange those goods to increase, too.
The value of the existing gold increases. More goods chasing fewer bits of metal make the metal more valuable.
You can’t create gold, but you can mine it. Every year, a considerable amount of new gold is added to the world’s above ground supply.
The gold standard is not perfect, but it does lend a certain honesty and discipline to the economy that fiat credit can’t.
When trillion$ can be created by the pushing of a computer key....