It also encourages lower production, higher unemployment and decreased investment.
Since wages will not decrease as quickly as prices in a non-manipulated labor market......
(Allow me to finish)..... unemployment will increase.
the purchasing power and savings of those working increases, thereby increasing their standard of living.
It's true that the 75% of the workforce that still had jobs during the Depression enjoyed lower prices.
Since increasing purchasing power will also mean that debts actually go up in value, reckless borrowing will be curtailed.
Intelligent borrowing will also be curtailed.
Contrast these negatives with inflation as dictated by the Fed. Real wages go down since wages don’t rise as fast as prices.
But wages rise faster than prices.
banks will not loan money because as it loses value there is little demand for it. Eventually interest rates will skyrocket
If there is little demand for money, interest rates will fall, not rise.
Choose your poison, I would rather has deflation than inflation
That's only because you don't understand deflation.
No, its because I understand the destabilizing influence and effect of runaway inflation. And prices increase way faster than wages during an inflation. Just look at the Fed’s disasterous handling of our money supply. If you really believe that printing one trillion dollars and giving it away to banksters, then you probably believe that Bernanke should be given a medal. And if printing money is the key to increasing wealth and our standard of living, then why not print 10 trillion.
The fact is that deflations are an unavoidable side effect of uncontrolled monetary growth. And the situation you have now is that the government has crowded out private investment and has debased the currency that foreigners will no longer buy US debt. This will inevitably result in still higher interest rates, until the real rate is positive, this will result in evaporating loan demand and thereby is major crash in the money supply and deflation.
The point is not choose your poison. The point is that by having a fixed money supply, not inflated by fiat currency, you can avoid the inflations and deflations that occur due to monetary manipulation. Given my druthers I will take deflation over hyper-inflation, any day.
One thing about the gold standard, while bubbles did occasionally occur, like railroad stocks, etc., multiple bubbles did not occur, like the present time.
The other aspect of sound monetary policy is that it forces sound economic policy upon our incompetent politicians. If they can’t print the money, and they can’t raise taxes, then they can’t finance endless entitlement and spending increase unless they figure out how to get gold out of seawater.
Interestingly, the only wars financed over the past several hundred years, were those conducted by Napoleon. Since France had undergone the revolution and hyper-inflation, the people would not accept inflation as a means to pay for war. That’s not to say that some wars aren’t worth fighting, they certainly. But they need to be financed by taxes, true borrowing from the populace and popular will.
Virtually every war in the US’s existence has been financed by paper fiat dollars.
So your choice is would you rather have $1000 that can purchase $1000’s worth of goods and services or would you rather have $1,000,000 that won’t be accepted by anyone, anywhere in the world, because that is exactly where we are heading.