| actually, i just randomly selected the $10 figure.. i didn't realize i should've thrown in a qualifier for those who took that statement seriously.. the point of that statement was that while bread was cheaper back then, people also made much less money. bread costs more now, but people make more. the fact that you haven't included wage increases shows your argument to be pretty hollow, which is why i said that it's all relative.
it is true that when wages are included, that items cost less in real terms during the gold standard.. of course, supposing we kept the gold standard, prices in 2005 would still be higher than in 1880 because the gold standard didn't eliminate inflation. so yes, answering the question - inflation IS inevitable.
one thing that we haven't experienced under fiat has been the price volatility characteristic of life under the gold standard. specifically, we haven't had the kind of deflationary pressures under fiat. and when the economy experienced these problems, there was nothing that anyone could do about it. it's just like seeing a fire, but not having any water/sand to put it out with. just gotta hope it eventually fizzles out before it burns the whole block down. the reason why we didn't end up with another great depression in 1987, for example, was because the fed was able to increase money supplies. the fed didn't do this during the great depression.
there is no magic bullet, although a constitutional amendment requiring balanced budgets would be nice.. the fact of the matter remains, that under the gold standard, we were regularly subjected to deflation which produced huge problems for the economy. at its worst, inflation produces unemployment and sucks away our ability to consume.. deflation on the other hand produces much more serious and difficult to resolve consequences. if i had to choose, i would pick inflation over deflation any day of the week.
since you are advocating gold, you should at least talk about or acknowledge the deflationary characteristics of that system. that's an extremely significant topic, and it would be very disingenuous to ignore it. |