Keith, you wrote:
It's no use infusing money into the economy if nothing actually happens -- which is what Bernanke has been doing for the past two and a half years to no avail. Being on a gold standard doesn't impede the creation of new money for economic change. The greatest economic (and social) change ever in the history of man took place in England during the 18th and 19th centuries when the gold standard operated. A whole society from top to bottom moved upwards and for the first time ever an avalanche of talent was released from the working classes. The great social change that took place in the western world during the 18th and 19th Centuries was due to tremendous technological and social change and not due to the gold standard. The cities became industrialized and people flocked from the countryside into the cities. As you've pointed out many times, a vast array of new goods, including consumers goods, military hardware and social infrastructure changed the ways in which people lived, fought and were looked after. And yes, Bernanke has been infusing money into the US economy. However, there is a very large difference between pouring out money letting it fall where it may and directing that money toward specific growth inducing purposes. The current American problem appears in part to be one of an inability to decide what to do with money that the Fed can make available. Politicians are at loggerheads on this, so much so that very little can happen. There have also been large shifts in power in the US over recent decades, and the question of who decides what - the politicians or the bankers - lurks behind the scenes. Obama has indicated that he would like to raise taxes on the incomes of the rich, but it's unlikely that he'll be able to do it. I don't think a revival of the gold standard would be very helpful now. Our current economic problems, if fixable, require decisions on questions such as whether the best course of action is debt reduction or stimulation via the injection of money into the economy, and, if the latter, what should be funded and how. Ed
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