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by PepeGomez 3907 days ago
That would still make currencies far more stable than modern currencies. It's very unlikely that a significant source of gold will be found and even if it will be, it won't be in owner's interest to mine it very quickly.

The price revolutions were literally a one off event and while it's usually described as "rampant", the inflation rate was at most in the range of a few percent and it would be seen as moderate to low today.
3 comments
creshal 3907 days ago
> That would still make currencies far more stable than modern currencies.

Stability is not inherently good. Stable currencies that suffocate the economy because they do not allow for rapid enough expansion or reduction of the money supply are a burden. Another example would be the interwar years and great depression, were virtually all countries suspended the gold standard because it was simply impossible to uphold, and the economy recovered from it.

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PepeGomez 3907 days ago
When the economy expands, things get cheaper. Like with most electronics in the last five decades or so.
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creshal 3907 days ago
Deflation is a lot more complicated than that, unfortunately.
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PepeGomez 3907 days ago
No, it isn't.
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creshal 3907 days ago
Okay, so you have products that get cheaper and cheaper. Is that good? No, the computer industry is in a deep crisis because of that – first PC sales tanked, then laptop sales, then netbook sales, then ultrabook sales, then tablet sales, soon smartphone sales… if products get cheaper and cheaper, you have no incentive to buy more than absolutely necessary, because not waiting with your purchase will always lose you money.

And then we have the other problems: What about rents? Debts? Wages? Do you decrease them over time, too? What happens if they aren't? Who would lend money under such circumstances, if just keeping the money under your pillow will make you richer anyway, and at zero risk, too?

Etc. pp.

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PepeGomez 3907 days ago
>No, the computer industry is in a deep crisis because of that – first PC sales tanked, then laptop sales, then netbook sales, then ultrabook sales, then tablet sales, soon smartphone sales… if products get cheaper and cheaper, you have no incentive to buy more than absolutely necessary, because not waiting with your purchase will always lose you money.

Yes, because that's absolutely what happened. What actually happened is that there is no longet any reason to buy the top end, because the low end is enough for most people.

>And then we have the other problems: What about rents? Debts? Wages? Do you decrease them over time, too?

Why should wages decrease?

>What happens if they aren't?

People have more money to spend and the additional demand further boosts the economy.

>Who would lend money under such circumstances, if just keeping the money under your pillow will make you richer anyway, and at zero risk, too?

People would definitely go back to saving and away from making debts. That is not a problem, the need to invest money when there is no objective reason to do so is what leads to investment bubbles and excessive debts.

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empath75 3907 days ago
https://en.wikipedia.org/wiki/List_of_banking_crises

Note all of the entries that start with "Panic of.." from well before the collapse of Bretton Woods.

Even the Great Recession wasn't that bad compared to what we had before.

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PepeGomez 3907 days ago
It shows much fewer crises before and virtually zero during the Bretton woods. If you click to some of them, you will see that most of them happened when the exchange to gold/silver was limited and people believed there isn't enough precious metals to back all the money, or the gold or silver standard was actually abandoned by some country.
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AnimalMuppet 3907 days ago
> That would still make currencies far more stable than modern currencies.

Not really. Let's say we're on the gold standard, and now the computer revolution happens, and the internet revolution, and so on. We've created a bunch of new businesses, which are worth a bunch of money, but the amount of gold didn't change. So the value of money had to change, because the size of the economy changed, and the amount of gold didn't.

For that matter: Which is growing faster, the population, or the amount of gold? That affects the value of money if we're on the gold standard.

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