Central bank management has achieved pretty much exactly what it's been tasked with doing: price stability of the aggregate inflation measure. This is despite large variation in underlying commodities like oil. Housing went mad, but it wasn't included in the measure of inflation and far too many people were happy with asset price inflation to stop it.
(In any case, money supply is far more a function of lending than of currency issue. Hard currency does not prevent expansion or contraction of the money supply)
They're not, they result from humans not being logical creatures.
> price stability of the aggregate inflation measure.
Depending on how you measure.
> Housing went mad, but it wasn't included in the measure of inflation
Case in point. The largest lifetime investment of 95%+ of the population and it became a bubble/mania largely because of central bank intervention in interest rates.
> Hard currency does not prevent expansion or contraction of the money supply
That is not my understanding. If your currency must be backed by gold for example, then the money supply would grow slowly and prices would adjust accordingly. This is very different from today's practices.
Not saying it's irrelevant. I'm just saying that the historical data does not support the assertion that fiat currencies result in markets that are less stable than commodity-based currencies.
It's easy to check this against, for instance, the great depression where rational economic actors drastically reduced their consumption of goods like, say, "food" or "shelter".
Despite being highly rational behavior, it was at times deleterious.
Very true, but the lesson of what can happen when caution is thrown to the wind would minimize irresponsible behavior for a very long time. Contrast that with current practice which is to drop interest rates to insane levels so people can continue doing what got them into trouble in the first place.
If you have a central bank constantly messing with interest rates and money supply, it distorts the market. That's why they do what they do. Whether we are better off or not I do not know, but to assert that it is irrelevant is incorrect.
I can agree that capitalism is more prone to boom and bust, but in a bust individuals will generally react accordingly in a mostly logical way. A central bank managed economy will (with the best intentions in mind I assume) often intervene in a way that promotes a continuation of the non (or negatively) beneficial economic behavior, if they didn't start it in the first place. This is where the hard money people are coming from, or at least this one.