Alternative explanation: Gold is over-valued with respect to fuel.

>> ^bmacs27:

Alternative explanation: Gold is over-valued with respect to fuel.
Well, I guess not everyone.

If you're on a gold standard, you have to guarantee your money is convertible to gold. That means your central bank sets its interest rates according to how much gold is on hand. If you happen to be losing gold, you have to raise interest rates, reduce the amount of money in circulation, so you can stay on the gold standard.

If — just suppose — you're in an economic downturn, and people are pulling a bunch of gold out of the banks, then you raise interest rates and reduce the amount of money in circulation, which keeps you on the gold standard... but also is exactly the opposite of the monetary policy you want when people are losing their jobs. It stops economic activity dead.

In other words, this modern crying-out for a gold standard in the midst of an economic crisis is of a piece with all the other claims that we ought to adopt policies not because they will help, but because they're painful, and we deserve pain, don't we? We've been very, very naughty, or we must have been, to get into this kind of trouble, and we need to punish ourselves. Or at least, Ron Paul needs to punish you. And trust me, this will hurt you more than it hurts him.

Read more: http://www.esquire.com/blogs/politics/ron-paul-gold-standard-bad-6654238#ixzz1o4oUit5j

@dystopianfuturetoday you're not helping anyone by misrepresenting the gold standard proposition and linking to a terribly disinformative article.

If you keep thinking like a central banker, you'll always hate the gold standard. Your contrived scenario just illustrates how these two things are incompatible, and you're absolutely right.

If you're in a recession, that means the economy made mistakes in a large scale. Trying to forcibly stop these mistakes from being corrected might avoid pain, but doesn't make the problem go away.

No one is advocating pain, but facing reality and letting corrections happen, whatever they are. If they're painful to some, so be it. Better than to keep doing the wrong thing.

Imagine how'd you live your life if you didn't feel physical pain. You'd have no aversion to risk, and you'd probably die without supervision.

The gold standard makes no sense in a modern world.

>> ^dystopianfuturetoday:

The gold standard makes no sense in a modern world.

A typical fallacy of modern economics.


Anyway, the dollar is losing value = higher gas prices

http://inflationdata.com/inflation/images/charts/Oil/Gasoline_inflation_chart.htm

Hey look, even if you account for inflation, gas prices are rising.

Try again, morons.