On 2011-06-12 6:13 AM, John Levine wrote:
Useful for something, but not useful for money. I can't help but note that the level of economic knowledge in the digital cash community is pitifully low, and much of what people think they know is absurd. (Anyone who thinks that a gold standard is better than what we have now, or that the supply of gold is fixed in any but a purely hypothetical sense, is either ignorant of economic history or shilling for gold speculators.)
What we have now has been tried many times before, and failed many times before.
The gold standard has never suffered the kind of wild alarming fluctuations that fiat currencies routinely suffer. Gold inflation was always very slow, and gold deflation was always very slow, possibly because people expected the value to remain stable, so in the event of deflation, disinvested in gold and increased their investment in other things, and on gold inflation, vice versa.
The most alarming gold deflation was the long depression, caused by the demonetization of silver and accompanying rise of the value of gold. By modern standards, it was not even a recession. The most alarming gold inflation was caused by the conquest of the new world, which resulted in inflation at about 1% per year for about a hundred years.
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