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To: Albert Barr
Would a gold standard really do that?

All by itself, no. Policy errors may lead to inflation even on a gold standard.

How could going to a gold standard fix all costs?

When I say price stability I mean that prices are not effected by the price of money, i.e. through the monetary phenomena of inflation and deflation.

There would still be ups and downs in the cost of energy, changes in productivity and other fluctuations in the cost of producing goods.

Of course. But these price fluctuations should not be the result of monetary policy. The price of money should be constant over time.

Companies would still have to compete for the best labor by offering higher salaries to lure new employees. Prices would still rise. I don't see how it is possible to have 0 inflation over time.

It should not be difficult to immagine at all. Fluctuations in price due to increased productivity or thechnical innovation should be happening al the time. However, the means of exchangine goods and services should remain constant. An ounce of gold should cost the same in 1975 and in 2007.

8 posted on 02/10/2007 11:56:21 AM PST by frithguild (The Freepers moved as a group, like a school of sharks sweeping toward an unaware and unarmed victim)
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To: frithguild
How does the price of gold stay fixed? They are constantly mining new sources of gold. If the government set the dollar to the gold standard they would buy gold to back up the dollar. In fact, the value of the dollar could be manipulated by how much gold the government actually has on hand to back the dollar.

Gold, like everything else, is a commodity that is traded. If Gold had a set value, nobody would trade it, what would be the point?
10 posted on 02/10/2007 1:18:37 PM PST by Albert Barr
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