Re: Re: gas

[christian11@xxxxxxxxxxxxxx]

Why does any government inflate the money supply?  Debasing the currency is a favorite hobby for governments going back to the Romans and beyond.  Why would the good old USA be any different?  Once Nixon severed the link to gold in 1971, the money supply was at the complete mercy of the limited wisdom of fallible human beings, and we got the monetary chaos we have experienced for the past 30 years.

David Shemano

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Since when has the gold standard (or any commodity money)insulated the money supply from fallible efforts of human beings? And what's so infallible about commodity money anyway? The US went _back_ onto a bimetallic money standard in the 1890's because wise and perfect gold-money deflation left farmers and silver miners bankrupt. Commodity money was not only _not_ insurance against infernal human tampering, it was itself a way of tampering with a failing market.

More recently, as Ian's post suggested, dollar surpluses had begun accumulating overseas quite a bit before the US closed the gold window. Else, there would have been no need for SDRs. It always strikes me as funny that conservatives harken back to this grand old gold standard, since it was an effect of Bretton Woods, whose existence they otherwise presumably deplore.

During the very late 70's and early 80's, when Volcker was on his recessionary interest rate tear (and, presumably, the money supply was tight), the price of oil showed little proclivity to decline. At that point, gasoline was about 60% more expensive than it is now, judging by the CPI.

Christian