Re:What the Fluck
by mistermann on Sunday December 08, 2013 @02:30AM
(#6869228)
> why are boom and bust "logical" in the first place?
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.
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)