Great Graphic: CPI under Gold Standard and QE

This Great Graphic was developed created by Matthew O'Brien of The Atlantic.  It illustrates that the gold standard that some want to return to did not generate price stability in the US in the 1920s.  It also illustrates the superior record of the Federal Reserve to anchor prices under the post-bubble conditions.

This type of evidence, however, will not put the gold argument to rest (sorry Mr O'Brien).  One of the purported virtues of a gold standard is that is, well, a standard as opposed to the whim or discretion of a handful of unelected individuals.  Some argue, in effect that a poor standard is better than no standard over time.

There is a near religious fervor in some quarters for the shiny metal. Leave aside the fact that various other "things" were used for a medium of exchange, including other metals, shells and salt, those advocating gold based monetary system only cite its previous use for its particular fascination.  This faith in gold does not appear amenable to reason or evidence of past performance.  

If it ever exist, the anchor is lost.  It seems that modernity, in part, is a recognition that the absolutes have been destroyed by the likes of Darwin, Freud and Einstein and their students and, at the same time,  it is the wish for the romanticized comfort the absolutes appear to offer.   
Great Graphic: CPI under Gold Standard and QE Great Graphic:  CPI under Gold Standard and QE Reviewed by Marc Chandler on August 27, 2012 Rating: 5
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