“That would be great. But what if it was a consequence of gold production increasing the money supply 1% per year while output increased 3%-4% per year?”
The supply of gold (money) should be set by the free market as well. Why would industry, in the long term, produce more output than the market can sustain?
Your example is actually a good illustration of why the private Fed cartel, which does not set interest rates or the money supply according to the free market, should be abolished. The artificial housing boom was partially a result of artificially low interest rates, which allowed many without real resources to purchase homes on credit.
How can ANYONE make proper long-term savings & investment decisions when the biggest market players are the Fed, the government and other insiders rigging interest rates, devaluing the FRN “dollar” aka US dollar, and propping up the stock market through Treasury’s Working Group on Financial Markets?
The supply of gold (money) should be set by the free market as well. Why would industry, in the long term, produce more output than the market can sustain?
Exactly! We should limit our GDP growth to the growth of the supply of a pretty yellow metal. What could go wrong?
The artificial housing boom was partially a result of artificially low interest rates, which allowed many without real resources to purchase homes on credit.
And we both know there were no booms or busts while we were on the gold standard, right?