In other words, you are calling Dr. Paul a fool, along with all others who support gold as a sound economic medium of exchange, indeed, you are calling several of the most brilliant minds in economic history, from Say to Hume, to later economic minds such as Mises, Rothbard, DeSoto, Menger, Hayek, Hazlitt, Hoppe, LeFevre, Bastiat, Sennholz, etc. All of those economic minds, you dismiss....interesting, thus you must place yourself in high esteem indeed.
Now, read your comment one more time and tell me that makes sense when compared to the actual history of the currency? Indeed, there were things, lots of things, that cost a few cents, but there were also things, lots of things, that cost more than a few cents, there were even things that cost a dollar, 5 dollars, 10 dollars…it’s amazing how economies are not so one dimensional, isn't it simply astounding?
But what you ignore, what you obviously must ignore, is that while the Dollar Price of Gold did have small incremental swings, the purchase value of the Silver Dollar appreciated to the point that each Dollar purchased more than its face value. Thus your argument is moot, for with an appreciating currency the ability to purchase goods and services is far greater than with a currency, such as the present fiat currency where depreciation of the purchase value has the opposite affect.
It is vital to understand that the structural market for gold has been substantially changed since the advent of the Federal Reserve System. It is also important to understand the difference of gold as money and gold as a demonetized commodity, forces are substantially different depending on the structural market.
Far more important perhaps, is the Comparative Value of the Dollar from 1800 to 1920 and to present. While the Dollar price of an ounce of gold did have swings, most minor, the real purchase value of the dollar relating to the price of gold, was substantially increased. With some minor ups and downs the purchase value of the Silver Dollar purchased more than the face value of the currency throughout the 1800s, with the exception of the Lincoln Greenback fiasco which was depreciated to about .35 Cents per face value of the Greenback.
Now, no matter how you cut it, a higher purchase value is economically growth intensive. In fact, the Great Moderation, a name by which the 19th Century is known, was a period of sustained economic growth while monetary deflation was taking place, but unlike the period of the Great Depression, the deflation of the 1800s was completely different. Also, it is important to understand, contrary to the commonly held view that the Great Depression was a period of devastating deflation, the fact is that there were countries during the 30s that suffered deflation without suffering an economic depression and there were countries that suffered an economic depression that didn’t suffer from deflation. During most of the 19th Century, there was an economic expansion and growth where prices fell from various structural factors, such as improvements in transportation, various advances in technology and other factors, thus the deflation of the 1800s appears to contradict the deflation that took place in the Great Depression which was a result of monetary policies within the Federal Reserve, even Ben Bernanke finally admitted that the FED caused the Great Depression.
So, let’s take a good look at your argument and see how much water it holds, shall we?
In 1786, the Dollar price of an ounce of gold [keep that in that in mind, an ounce of gold] was $19.49 and remained that for 6 years, then in 1792, the dollar price of an ounce of gold dropped to $19.39. Dang, a 10 cent drop in 6 years, doesn’t sound very stable does it, OMG you have some ammo you can use now, but wait, let see what takes place after 1792. From 1972 all the way through 1833, the Dollar price of an ounce was $19.39, between 1834 and 1836 it was $20.69. From 1837 to 1920 the dollar price of gold was $20.67. Strangely enough, that is a very good record of stability, much more than you asserted in your earlier comment.
In fact, if you look at the various graphs and charts available from 1800 to 1920 showing various rates of inflation and deflation, then you can readily see that the period between 1800 and 1920 was relatively stable compared with the period between 1920 and the present. The highest rate of inflation during the 1800s was, of course, during the 1860s through 1870, otherwise there was little inflation and more often deflation of the currency, which means that there was an appreciation in the purchase value of the currency…each dollar bought more goods and services.
For those who adhere to the mistaken confidence in the Fiat Paper Money Substitutes we now call Dollars, all they need do is look at the depreciation of those notes compared to historical purchase values. For instance, what $100.00 bought in 1913, before the advent of the Federal Reserve System, now takes $2,317.09 to make a similar purchase, that is an immense depreciation in the purchasing power of our currency and we are paying for that depreciation in ways that not many people consider, especially those who, like yourself, don’t seem to see a problem with the Federal Reserve. Even if we don’t go back that far, a $100.00 in 1940 now takes $1,638.51 to make the same purchase. Let’s get close to our own period and see the effects of the Federal Reserve’s monetary policy and what results from having an elastic money substitute as a currency. $100.00 in 1970 now takes $774.97 to make the same purchase. Even the $100.00 of 1985 would take $213.19 to make a similar purchase, obviously, there is a stability problem with the Fiat Paper Money Substitutes, as well as with the Federal Reserve and it’s policies. Compare the stability of the 1800s with that since 1920 to present and only a blind man can ignore the instability of our current system.
In fact, if you actually look at the economic dislocations of the 1800s, the severity of them are nothing compared to those from 1920 onward. Indeed, if you look at the contributing factors of those economic dislocations of the 1800s, you will quickly find that, for the most part, sound money was not the issue unlike the problems we have faced since the 1920s where the combination of FED policies and the issuance of Notes, the extension of easy credit and various other monetary factors have played a direct role in modern dislocations in this country and around the world.
So, let's see, if you have an idea about economics...by all means, give us what you have, amaze us with your economic and monetary mind. You have, throughout your posts, not been very clear about just what your ideas on economics or money really is. Are you a Chartelist?
"We are not a nation, but a union, a confederacy of equal and sovereign States" John C. Calhoun