Questions about the gold standard vs. fiat money?

Gold would, over enough time, have a deflationary trend, as seen from our founding to 1913. Fiat has the tendency to inflate, as political whims control the value.

Now, gradual deflation would lag our economy in a simplistic term, but understanding how it would lag puts better light on things. Deflation punishes debt and rewards savings, unlike inflation. So, companies wouldn't use debt to grow, they would use wealth to grow. This is more positive growth. So, essentially yes, we would grow slower, but it would be a more sustainable growth and would be naturally more avoidant to bubbles. That is not to say you wouldn't have periods of inflation, because there are other factors to consider, but it would help solidify our currency.

But, you hit right on the head what Milton Freidman had to say on the issue. It matters not if it's a fiat currency or a commodity currency (gold isn't the only backing you can use, platinum, silver, palladum, ect), so long as the size of the money supply does not contract or expand beond the needs of the market. The real issue is if politicians have the courage and disipline not to use the monetary system for their political gain. I have far less faith in that than Freidman does, which is why I'm more of a follower of Mises.

Fiat Money Vs Gold Standard

fiat money like US dollar can be traded for gold /silver at the speed of light on the computer.

we will always know in real time the price of gold silver oil wheat corn petro. gas and other commodities.

the world will need both

1. fiat money for ease of use

2. commodiites money like gold silver oil wheat food to measure the value of of the fiat money.

it extremely is an surprising question, and that i applaud you for asking considering's extreme to the well being of our modern financial equipment. ultimate: Very shelter. each and every greenback is worth plenty gold, without room for errors. In concept, inflation does not be a concern, neither could deflation, through fact we'd have the comparable volume of gold backing our forex. even with the shown fact that, i've got not got faith that usa could desire to pass back to a ultimate, through fact it could desire to not help the dimensions of our financial equipment. there is not sufficient gold interior the international to help our us of a's modern financial equipment (GDP), that's why Nixon took us off of the final initially. If the executive. did not pass off of the final, then our financial equipment could have iced up, or our executive. could have revealed paper money without announcing that it is not backed by ability of gold. What could desire to ensue there could be resembling the run on the banks interior the great melancholy, basically human beings could be working to the reserve claiming gold they have not got. Fiat forex: helps growth of economic equipment in keeping with GDP. As our GDP grows, our financial equipment grows, increasing our GDP. even with the shown fact that, this finally ends up in a "Debt way of existence," that's fairly widely utilized in our society immediately. If it extremely is in lots of circumstances prevented by way of government accountability, harder bankruptcies and much less mortgage regulations, then the Fiat equipment works. considered one of two issues have exceeded off (besides the shown fact that i'm uncertain which). the two human beings lost their financial IQ, or the human beings forgot that its important to flow with politicians with a extreme financial IQ. this implies that our all and sundry is smothered in debt, and now, so is our government. yet another element that exceeded off is the conservatives (frequently bigger financial IQ), lost their IQ while Reagan took workplace, and believed that his financial rules have been financial rules, and not war against the U.S. (Which we gained, they went bankrupt). They weren't meant as long-term solutions (even even with the undeniable fact that they have been portrayed that way through fact in any different case it does not have worked, nor could he have been elected). very final be conscious: i think the present Fiat equipment desires great reforming, consisting of a balanced funds substitute (different than circumstances of war and recession), and a variety of of different different mandatory amendments.