Everything is peachy.
The stuff is pretty.
It was a sas day when gold was outlawed back in 1933. Not that I was there, mind you.
The U.S. abandoned gold ....in 1933, after which its dramatic recovery immediately began.....
It is my understand that the recovery did not become sustainable till the war spending and production began in ernest.
Going off the gold standard was but one of numerous failed attempts. War finally did the trick.
My memories are of a down side of being on the gold and silver standard. Foreign powers began turning in silver and gold certificates and or dollars and demanding gold in return. Depending on how much paper a government has in outside circulation, your gold and silver would quickly end up in places other than Fort Knox.
This is a bad start; anyone who uses the word "meme" is tentatively classified as a liberal yogurt-head. Or a pseudo-intellectual poser.
Under such a monetary rule, it seems the dollar is "as good as gold."
Here he's quoting the late Jude Wanniski. Wanniski was an idiot. He has a long history of backing the right decision for all the wrong reasons.
If a government can go on a gold standard, it can go off, and historically countries have done exactly that all the time.
This is a fair point, and it's really the whole substance of his argument. There's only one problem: folks who want a gold standard usually want to do away with centralized banks. If the federal reserve doesn't exist, then the "government" has nothing to do with the basis of our currency.
...there was a big increase in demand for gold, the one safe asset in this setting, which meant the relative price of gold must rise. If everybody is trying to hoard more gold, you're going to have to pay more potatoes to get an ounce of gold.
The use of the word "hoard" here is a dead giveaway. If I save money, am I "hoarding" it? This guy is a Keynesian, and believes in the asinine "paradox of thrift". If people want gold more than they want potatoes, then the price of potatoes will indeed fall--but that's one of the things that is necessary to get out of a depression! Only keynesian idiots think we can get out of a depression without any decreases in any prices or wages.
The longer a country stayed on the gold standard, the more overall deflation it experienced.
And deflation is a bad thing because...? Computers are cheaper than ever--yet computer industry profits are higher than ever. I'm sure the author knows this, and realizes that he needs to prove that deflation is bad, right?
Many of us are persuaded that this deflation greatly added to the economic difficulties of those countries...
I guess I'm wrong. Instead of proving it, he lets us know that he and his friends think deflation is bad. I'm like, so impressed.
A gold standard only works when everybody believes in the overall fiscal and monetary responsibility of the major world governments and the relative price of gold is fairly stable.
Yup, this guy (1) believes in central banks, and (2) is out-and-out keynesian. He believes that holding prices stable is important. The gold standard has nothing to do with "stabilizing prices"; the point of the gold standard is to prevent artificial inflation, whereby the owner of the printing press steals money by devaluing the currency. With a gold standard, monetary hijinks are prevented because people can run to gold if the currency is inflated. In that context, however, prices will still rise and fall. Increasing overall wealth translates into decreasing prices--i.e., deflation is quite normal.
The mistake made by the Fed during the 1920s was expanding the supply of money and credit too rapidly. However, as increasing productivity prevented consumer prices from rising, the Fed was unconcerned about the inflation it was creating. Instead, the excess money and credit that spilled into financial and real estate markets caused asset prices to rise, which resulted in claims of a "new era" (sound familiar?).
The bust of 1929 led to the Great Depression of the 1930s not as a result of Fed tightening, as Bernanke claims, but due to the misguided economic policies of the Hoover and Roosevelt administrations.
By preventing market forces from efficiently correcting the imbalances created during the inflationary boom of the 1920s, the Federal Government turned what otherwise would have been a normal, though severe, cyclical recessionary bust, into what became known as The Great Depression.
Forget gold. Get the government out of the business of issuing currency.
I never understood the gold standard. Gold is a limited resource while production of goods and services grows exponentially. How is there enough gold to keep up? We need a way to increase the money supply, and a fixed asset like gold does not allow for that.
Same with paper....
Everything is peachy.
Someone please send this guy a history book.
Arguably untrue. Lend-Lease and WWII led to recovery.
Gold is mesmerizing, most malleable and prized for its durability but any man will trade his own weight in it when desperate for a single drop of water.