[trevelyan]

"Because printing more money is just another form of stealing."

When the amount of gold in circulation falls, its value rises and people go dig up more. And yet your logic would make this a criminal act, because "digging up gold is just another form of stealing". You make the gold standard criminal by definition.

So I doubt you really mean what you are saying, and I have serious doubts you understand these issues since your rhetoric as well as your misunderstanding of what Keynes wrote basically echos the rhetoric of the Republican Party under Reagan and Bush, the two administrations which have done the most long-term damage to the US national budget, and whose anti-debt crusade (once out of power) has been largely responsible for keeping unemployment so high this long after the crisis.

What would Keynes have advocated in 2008? Unquestionably a more aggressive fiscal stimulus in 2008 once it became clear monetary policy had failed to prevent deflation and soaring unemployment. Your concerns about debt would be irrelevant because the cost of capital to the US government was zero: the world was (rightly or wrongly) clamoring to buy Treasury Bonds at non-existent rates of interest.

This approach becomes untenable once there is inflation or when competition for capital raises interest rates. But if the former happens then you've eliminated deflation and solved the unemployment problem. And if interest rates rise without triggering inflation? Then you use monetary policy to lower them and increase the money supply again through market mechanisms until deflation stops. Rinse and repeat until unemployment is close to its natural rate again and/or you get inflation, at which point you declare victory and go home. Radical? Considering that the total cost of the 2008 Economic Stimulus act was about 1/4 of the annual US military budget, it is hard to see pursuing full employment as an unreasonable policy, especially when the cost of doing so was effectively zero.

[stretchwithme]

Gold is the most stable commodity in the world, which is one reason its ideal for this purpose. Most of the gold that has been mined throughout history is still part of the supply.

And the one getting that portion of the gold supply is doing the work of getting it out of the ground. So I really don't see how that's stealing.

Fiat money is another matter entirely. As most fictional things are quite different than real things.

Jude Wanniski makes an excellent case for gold in The Way the World Works. He also explains why inflation is so dangerous. I encourage you to check it out.

[trevelyan]

No-one is advocating inflation: we are talking about the best policy response to a deflationary shock and liquidity trap.

First you claimed that increasing the money supply to prevent deflation is wrong because it is theft. Now you retreat to the claim that theft is OK as long as it requires "getting [gold] out of the ground". So you're claiming that there are certain arbitrary activities (moving dirt) which should be government-protected as legitimate ways of debasing a currency and stealing from other citizens.

Leaving aside the fact that your proposal encourages political corruption in natural resource extraction, I fail to see why someone with a pick-ax should be entitled to inflate away my savings. But if you insist on the matter please tell me again how your proposal is different from Keynes' example of burying money in mineshafts.