<I have presented a quantitative argument that tying monetary systems to gold will bring permanent inflation, or doom the world to sub par economic growth, many times. >
Zeev, to be fair, current economic thought is the opposite, that tying to gold would be too restrictive monetarily... those with economics backgrounds can easily come to the conclusion that you haven't a clue IMO.
< Could you please, at least once, present a cogent (hopefully, quantitative) argument why such tie will bring price stability? >
Granted how much gold can be dug seems like a silly way of expanding the money supply to me... however, in real life this should clue you in [as other economics "students" are] that, since erudite people actually entertain this idea, monetary controllers have been really terrible in the past.
<Don't invoke "disciplining the printing presses" arguments, it is a vacuous argument, particularly in view of the new realities of fluid and open currencies markets doing all the disciplining required.>
But Zeev, arguably the currency markets have shown that there are TONs of countries that should have been on the gold standard! I assume you don't need me to name them... in the U.S. as recently as the 70's monetary authorities arguably did a much worse job than a gold standard. Now if you're going to argue that it's all different now [perhaps central bankers genes have finally evolved past inflationary tendancies in the past couple of decades] to me THAT is arguably vacuous... we haven't had a serious downturn since THEN! Not even ONE real test to be fair.
<Use the simple route of determining a price of gold that can back the required monetary base in the world, and the growth rate in gold production required to maintain the growth rate of the world economies, assuming, of course, that monetary aggregates must grow at least at the same rate as the GWP. Then try and find out if that growth rate can be sustained indefinitely without having to, every so often, "repeg" currencies, since there will not be sufficient gold extractable at the old price to satisfy both the monetary as well as the other demands on gold (which themselves should grow at the same rate as GWP).>
Zeev, to be fair if anyone could do all that, you'd be right, we wouldn't need a gold standard.
DAK |
