An Overview of American Economic Issues in Plain English (Part 1)

[cayleighs]

Thank you so much. I am in AP MacroEconomics and I have to write a paper on the current economic issues of America and how to alter the situations. I haven't been paying much attention to the news lately, so your post helped me out a lot. Thank you!!!

[Jason_Els]

I'm feeling smug about now.

[Mircea]

Originally Posted by Jason_Els

In a perfect economic system, a government should only print enough money to reflect the value of its economy (or gold holdings). As the economy grows, so can grow the money supply because there would be no inflationary effects. But if the economy contracts, then the government should withdraw money from the system to prevent inflation. By doing that, the value of the currency remains constant and so the economy remains stable.

You present a contradictory argument that's based on a flawed premise which is why the Austrian school's thesis fails.

Of course the Austrians want everyone to switch to gold. They're positioned in the gold market and you would make them rich beyond the wildest dreams of avarice.

I'm curious as to why you fail to mention gold panics. Are you trying to hide something from people?

Why don't you want to tell them the truth?

You know what I'm talking about. The Panic of 1907, the Rich Man's Panic, the Panic of 1893, the Panic of 1857, and I can go on and on. And that's just panics in the US. I don't think you want me to embarrass you by listing all the panics in other countries, plus world panics.

It's very easy for a few investors, like the George Soros kind or a few devious countries to get together to manipulate gold prices and wreck havoc with your country.

That's one reason why the US and most other countries abandoned the gold standard. They got tired of having their economies screwed with.

The false premise is that an economy would grow simply because it's on the gold standard. That would be true if and only if the value of gold increased or a country acquired more gold.

And that's the second reason many countries left the gold standard. They could foresee constant warfare to acquire gold, gold reserves and gold mines.

If the US had stayed on the gold standard, there wouldn't internet, or cell-phones, or DVDs, or HDTV now.

Countries on the gold standard are not impervious to Cost Inflation, and the Mises Institute totally ignores that, as well as the 5th type of inflation, Natural Inflation.

You also ignore the fact that even on the gold standard, currency values are still subject to supply and demand, and in that case $1 would still be 0.68 Euros or less.