What disturbs me the most is the connection the gold standard had with the major upswing in inflation. In my view, the loss in value seems very connected to the policy of inflationary targeting, though this isn’t evidence of correlation, just my hunch; pegging world currencies to the dollar, and using the dollar as an exchange for gold for holders of said dollars, was probably a bit of a mistake on our part as we tried to hold gold at a particular value; and ultimately reneging on our promise to exchange dollars for gold, allowing the currency to float and ultimately creating a purely fiat currency helped to decrease value as we needed to pump more money into our efforts in Vietnam.
We made a lot of really terrible economic decisions in the past century, despite its last decade of unbounded growth, as we were declining a great deal in terms of industry and manufacturing. “Free” trade has been good for us, in that we can obtain products very cheaply as long as consumption is our primary concern, but quality isn’t there and we’ve lost a lot of our ability to produce quality products ourselves.
Additionally, that CPI index just seems extremely unacceptable on many levels. How does it stay relatively level over a 150 year span only to skyrocket in 60?
If only this were a chart of some company’s profits, Inflation in the United States (1774–2007)
I will add the caveat here that, uh, I’m a web designer, and my passing knowledge of economics is truly limited to mere hobby. But, in the latter days of the empire of Rome, we saw inflationary pressures causing widespread problems in terms of the empire’s stability. What does that chart tell you?
And frankly, this post isn’t meant to imply anything. Rome isn’t exactly burning, but it’s going to have difficulty maintaining and funding itself at some point; it doesn’t seem to me that we’ll be able to print money fast enough.