| i don't exactly see the point in talking about the dollar's loss of value by comparing it to its original value... you haven't made any connection between that and inflation.. plus, the comparative values of our currency seem awfully relative. if your "lost 95% of its value" line was actually accurate, we should be paying a couple $hundred for a loaf of bread, which definitely isn't the case.
and by saying that using the gold standard, you must also think that nominal price volatility isn't a big deal - since this is a core characteristic of the gold standard. specifically, it's okay if we open ourselves up to the threat of deflation, or rapid inlationary changes approaching 10% in one year... real inflation under the gold standard was about 2%, while real inflation under fiat has been about 3.3% per annum... not exactly a huge difference unless you're using a century for your timeline. we under fiat, however, we haven't experienced the sorts of nominal price volatility that was characteristic under gold. |