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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Zeev Hed who wrote (75158)3/4/2001 4:45:35 PM
From: yard_man  Read Replies (1) of 436258
 
How silly can you get?

You talk about gold being a currency then go on to define inflation in terms of the amount of paper currency that can purchase gold ... plain silly. If gold became currency and GWP grew faster than gold could be mined it would simply meant that as time progressed -- the same amount of gold would purchase more goods. That's not inflation ...

>>Don, whatever the then current psychology about gold (hidden or "known"), if gold serves as the corner stone of the money in circulation, the production of new gold must be at about twice the general growth of the GWP, half to supply the current uses (which one would assume should grow at the same rate as the economies) the other half, to support the growth of money in circulation for a growing world economy. If gold production does not grow at twice GWP, economies will slow (for lack of monetary instruments), or the price of gold will creep up to allow for the increase in the money base (thus perpetual inflation). Since gold production at constant production costs is not growing at twice the economic growth rate, the only way to increase production is to exploit less efficient deposit, at higher cost (and thus higher POG), thus inflation.<<
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