A place for philosophical/political ideas to stew.

Thursday, September 18, 2008

Gold Standard vs. Fiat Money



Data Gathered here and here . Although it's not possible (or maybe it is, ask an economist!) to predict what gold prices would've been like if we were on the gold standard (maybe they would've been more stable), it bears to keep in mind that the U.S. is not the only country in the world, and other countries do use fiat money. Although the overall trend is for the gold to stay roughly the same price, it often moves unpredictably. The CPI (which is basically a measure of inflation, if you're in a year where CPI is 200, your money is half as valuable as in the year where it is 100), on the other hand, has a predictable movement. Something that is predictable is the next best thing to something being constant. Anyways, this chart is why, in my opinion, it is not at all useful, and probably even dangerous to go back to the gold standard.

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