MDB8080 Wrote:
Jun 06, 2012 9:21 PM
The gold standard is more than likely the best ever devised, so long as coins are not debased. The only difficulty that I've not been able to wrap my non-economist's brain around is the following. With a basically stable world population (to the 1700s), no problem. But since the Industrial Revolution, population has grown substantially. If the money (i.e. gold) supply remains constant (i.e. discoveries/mining don't keep up), then the value of each ounce will have to decrease (more people do more work, thus each ounce "counts" more work, so the same amount of labor is worth less gold). Deflation, in other words. Price deflation everyone loves. But no one has yet solved the psychological problem of wage deflation.