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Thanks for the article. I like this quote:
"Rather than continuing to manipulate interest rates, the Federal Reserve should simply stop creating money. That would bring an end to any danger of price inflation, since there would no longer be any monetary expansion putting upward pressure on prices in general in the American economy. And by ending any further monetary expansion, interest rates would be free to tell the truth: how much savings is actually available for investment purposes, and therefore how many and what types of investment projects can be undertaken without a future artificial investment bubble having to burst."
-- Steve
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That's a good point though, as I've said, I'm not advocating the gold standard in particular, just a fixed money supply. I suspect this will eventually happen through verifiable and secure private digital currencies.
-- Steve
It seems to me that creating money by taking it out of the ground (gold) has a couple important advantages over creating it via the printing press with regards to monetary stability that I don't recall being mentioned here:
(1) The market can take into account the amount of untapped gold reserves in the ground and the cost of extracting them better than it can take into account when politicians might decide to print more money.
(2) Inflation caused by the introduction of new gold has a built-in safety valve that inflation caused by the introduction of new paper money does not, because if newly introduced gold causes the price of gold to fall, more of it will be used for alternate purposes (jewelry, industrial uses, etc.), whereas if the value of paper money falls, very little of it will be diverted to other uses since it has very little intrinsic value.
Yours in liberty,
<<< Starchild >>>
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