Quote:
Originally Posted by FlyingCaddy
Loss of value vis a vis other currencies, especially is an import based, consumer driven, economy. Also the loss of value in comparison to the dollar's value in years past, it take more dollars now to buy the same basket of goods purchased last year.
2007 Inflation Rates by Country, nevertheless, please note that inflation cannot really be compared between nations. When comparing currencies across nations , the appropriate measure is the exchange rate. |
Some inflation is good - it's like a lubrication for the economy, and the key is that it's a stable amount. In the US, 2.0% is considered to be ideal. No inflation or deflation is bad. Just ask those who lived through the great depression or the Japanese and see what they thought of falling real prices. Thus, 0% inflation or less is not what we are after. The key here is to link price stability to growth.
In terms of the gold standard vs. fiat, we can look at past history to consider price stability and its effects. The US went off the gold standard in 1973 for good. Compare price stability and the stability of growth prior to 1972 and after.
For the look at price stability, pull up the attached file. Notice the relationship between price stability in the Voelker/Greenspan/Bernanke era and stable growth: the two longest expansions in post-WWII era combined with very soft recessions.