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Monday, April 24, 2017

An Incremental Return to Gold-Backed National Currencies

http://therpc.ca/an-incremental-return-to-gold-backed-national-currencies/

One of the biggest and most widely used arguments against a gold standard is that such a system doesn’t factor in the highs and lows of regular business cycles.  As such, economic growth could be stifled and liquidity would become scarce.   
This was problematic with the emerging central bank mandates which would need to fine tune and tweak monetary policy through the use of interest rates and money velocity.  The Consumer Price Index (CPI) and GDP deflators were the tools by which the central banks measured the performance of the economy and could expand or contract the money supply without the burden of gold standard restrictions.

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