gold, page-49008

You want to revisit the past?

It involves poverty, war, dictatorships and pariah states. Globalisation and diplomacy have achieved a lot, there's been no major wars for decades.

Harking back to the US Constitution is a waste of time, economics have changed since then but goldbugs love living in the past when gold was money, but it's not anymore, it's an interesting speculative activity and a hobby for coin collectors, which is why most of it lives in strongrooms and central banks, who've been losing money for decades. George Washington wasn't familiar with credit cards, international transfers or internet banking.

=============================


Ben Bernanke and Harold James, in a paper called “The Gold Standard, Deflation, and Financial Crisis in the Great Depression: An International Comparison” published in 1991 (NBER working paper version here), noted that 13 other countries besides the U.K. had decided to abandon their currencies’ gold parity in 1931. Bernanke and James’ data for the average growth rate of industrial production for these countries (plotted in the top panel above) was positive in every year from 1932 on. Countries that stayed on gold, by contrast, experienced an average output decline of 15% in 1932. The U.S. abandoned gold in 1933, after which its dramatic recovery immediately began. The same happened after Italy dropped the gold standard in 1934, and for Belgium when it went off in 1935. On the other hand, the three countries that stuck with gold through 1936 (France, Netherlands, and Poland) saw a 6% drop in industrial production in 1935, while the rest of the world was experiencing solid growth.

http://econbrowser.com/archives/2005/12/the_gold_standa