Clause 61: The Pushback Blog

Because ideas have consequences

Fiat Money

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Here is a simple but effective presentation on fiat money:

http://www.marketplace.org/topics/business/whiteboard/fiat-money-it-has-nothing-do-car

The problem with a gold standard is that the monetary base, which is the amount of money in circulation, can’t expand to keep up with the economy. Then there is too little money chasing the available wealth, which depresses the economy.

The problem with fiat money is that the monetary base can be expanded by the government to be anything. It need have no relation to the actual economy. Then there is too much money chasing the available wealth, which inflates the economy.

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Written by srojak

May 23, 2013 at 3:59 am

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