Dollar Devaluation To Fix The Great Recession

[brxndxn]

Evan, the Fed 'let the money supply contract by 1/3.'

How does the money supply contract by 1/3 if it's in gold?

 

[First]

Originally posted by: brxndxn
Evan, the Fed 'let the money supply contract by 1/3.'

How does the money supply contract by 1/3 if it's in gold?

Huh? People didn't exchange money in gold, they exchanged money in dollars, pegged to gold, via a fixed exchange rate.

 

[LegendKiller]

Originally posted by: Evan

Originally posted by: brxndxn
Evan, the Fed 'let the money supply contract by 1/3.'

How does the money supply contract by 1/3 if it's in gold?

Huh? People didn't exchange money in gold, they exchanged money in dollars, pegged to gold, via a fixed exchange rate.

It's amazing that they just don't even know what system we had before or how it worked, yet they can say it was soooooo much better.

 

[brxndxn]

Originally posted by: Evan

Originally posted by: brxndxn
Evan, the Fed 'let the money supply contract by 1/3.'

How does the money supply contract by 1/3 if it's in gold?

Huh? People didn't exchange money in gold, they exchanged money in dollars, pegged to gold, via a fixed exchange rate.

People exchanged gold as money too. The United States is not the only history that exists. My question is simple. And, I would further argue that it is more difficult to inflate/deflate the money supply when the dollar is pegged to gold.

If the money supply is in gold, how does it contract? Why is a fiat system better than a gold-backed system?

 

[First]

Originally posted by: brxndxn

Originally posted by: Evan

Originally posted by: brxndxn
Evan, the Fed 'let the money supply contract by 1/3.'

How does the money supply contract by 1/3 if it's in gold?

Huh? People didn't exchange money in gold, they exchanged money in dollars, pegged to gold, via a fixed exchange rate.

People exchanged gold as money too. The United States is not the only history that exists. My question is simple. And, I would further argue that it is more difficult to inflate/deflate the money supply when the dollar is pegged to gold.

If the money supply is in gold, how does it contract? Why is a fiat system better than a gold-backed system?

Who was exchanging gold bars itself in the US, when, and in what quantity? Certainly nothing significant.

And money supply contracts in a fixed exchange rate system just like any other contraction; people stop consuming and start over-cautiously saving, which has the effect of stifling foreign investment and to a very real extent domestic imports. This is very, very bad and the amount of dollars dedicated to production every year suddenly starts decreasing. The dollar being pegged to gold has nothing to do with the reality that the money supply will (and indeed, has) contracted. That is precisely why a central bank of some sort and a gov't is needed to supply loans and print dollars in said emergencies.

As for your other contentions, we're only talking about the U.S. in this conversation though I'm not sure how talking about other countries helps your case. Can you name a country that has pegged their currency to gold and has been successful as a result? Nope. Gold stifles the upward potential of production unnecessarily, because all fixed exchange rate systems limit monetary policy options. Getting off gold with Bretton Woods was a move that led to the greatest period of growth in U.S. history. Hard to argue the numbers.