Quote:
Originally Posted by charles brough
This is where its value lies: it avoids the ruination of currency with hyper inflation.
|
Well, sort of, but its one of the worst ways to go about it! Talk about cutting off your nose to spite your face!
You're missing the point that no matter what you use as "currency" whether it's paper or Pieces of Eight supply and demand rules the markets, and artificial pegging of your currency will exacerbate fluctuations in that supply and demand.
It's true that pegging your currency to a specific exchange rate on a rare commodity can rein in foolish Monetary Chiefs, but the benefits of prudent floating of currencies to smooth out economic cycles far outweigh the benefits of assuming that those Chiefs are fools and making their jobs automatic.
The thing that the power to print money--the key factor in causing any level of inflation along with shortages that even a gold standard does not protect against--does is that it allows spending by the government to fill in when consumers and businesses cannot during economic contractions. If this spending is in the form of loans to be paid back later (that's what those bailouts are), or in the form of infrastructure projects or investments in new technology that provide both short term work opportunities as well as--and more importantly--providing jump-starts for new business as the expansion starts, such printing of money is simply in advance of the growth to come.
This sort of advantage from government spending is never possible according to extremists on the Right, and it would be better to go back to the pre-Civil War sitution of every man for himself, and if companies want railroads or highways or airports to improve trade, well, they just have to build them themselves. The fact that Obama is suggesting this sort of spending of course is a harbinger for Imminent Doom as far as these folks are concerned, no matter what the last century and a half of US history has shown.
So:
Quote:
Originally Posted by charles brough
We are heading for hyperinflation also and I think we are in for a taste of it when we come out of this very expensive recession.
|
Why do you think so? With the recent drop in oil prices there are no inflationary pressures at all, and the Trillions of dollars of government spending that are currently being put in place are not only essential to avoiding the implosion of the economy a la 1930-32, but are spit in the ocean compared to the size of the US economy, and assuming even a slow turnaround, can easily be absorbed by new business activity--and rapid growth thereafter if we become leaders in green tech because of all the investment that's going to be included.
You may be disappointed if you fail, but you are doomed if you don't try,
Buffy
