perhaps of interest to a few

  1. dub
    33,892 Posts.
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    Good morning,

    What follows is an extract taken from an article by Nelson Hultberg dated January 7, 2003.

    The full article can be read at

    " ..... The great majority of economists in our government and in our colleges today continue to deny the necessity of the above reforming steps, and they become almost apoplectic upon hearing that a gold standard is being advocated. They go to great lengths to try and convince their audiences that the economy's money supply must be continually inflated in order to produce growth. But this is totally erroneous. America's productive growth during the 19th century was spectacular, and there was no Federal Reserve pumping unconvertible paper money into the system at all.

    For example, the Consumer Price Index decreased by 30 percent from 43 to 30 between the years 1800 and 1913 (an average of ¼ percent per year).3 This was because the money supply of this time, being tied to gold, was very difficult to expand via the printing press in excess of the growth of goods and services. As a result, there was no upward pressure on prices.

    In contrast, today we no longer use gold as money, but paper printed by the Federal Reserve as it sees fit. As a result, the Consumer Price Index increased by 1,663 percent from 30 to 529 in the years 1913 to 2000.4 This was because the money supply was created at a far faster rate than the production of goods and services -- all of which should tell us quite clearly that government money managers are not reliable (and never will be), and that a fiat paper money system will never be stable.

    When the above figures are combined with other vital 19th century statistics, we readily see that the Keynesian claim of "growth needing inflation" is a blatant lie. During the 19th century due to the dollar being backed by gold, we enjoyed gently deflationary prices (the beneficial kind of deflation) and yet also rapid economic growth of all goods and services. As recorded in The Statistical History of the United States, the GDP increased over 500 percent in just the years 1870 to 1913, averaging 4.3 percent annual growth, and real wages for the workingman tripled.5 In comparison, we average about 2.3 percent annual GDP growth today, real wages are stagnant, and we are plagued by inflationary prices brought on by the federal government's relentless monetary expansion, with a possible gargantuan credit collapse now looming ahead to balance our government created excesses.

    The Keynesian claim of monetary inflation being a requisite for healthy economic growth is thus ludicrously in error. So also is its claim that only with government control over the currency and banking system can we have "stability" in our economy. Growth will take place very nicely without government inflation of the money supply; and what's more, it will be real growth, not the frenzied, speculative, boom-bust kind of growth our Great Society dreamers have given us. As for stability, how can any logical observor of the 20th century claim that the Fed's inflationary monetary policy has given us stability? Yet this was the publicly announced reason for the Fed's creation in 1913. It was going to be the great "stabilizer" of the banking system and our economy. Yet it has brought us precisely the opposite. .......

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