Austrian Economics vs. Mainstream Economics (Interesting)

February 22, 2012

If you have twenty or so minutes, watch this video.

3 responses to Austrian Economics vs. Mainstream Economics (Interesting)

  1. The problem with the gold-standard deflation in the Great Depression was that Minimum Wage held wages artificially high. As such, many people simply were not worth the price set by the government, so no-one bought their labor. Only when the gold standard was dropped, and the dollar-denominated labor rates were allowed to increase above minimum wage.

  2. I haven’t watched the video, but I agree with Jack. Gold standard would be highly deflationary and extraordinarily bad for the economy.

    Gold is too inflexible, as the supply of gold can never increase as fast as the global population (and total hours worked). If we, and the rest of the world, were on a gold standard, we would be paid in gold dust, as the price of gold would shoot to $100k or more per ounce because of its scarcity.

    Ideally, the money supply should grow/shrink along with labor output, to keep prices perfectly stable.

    But don’t take this as a defense for the Fed either. Runaway government spending, enabled by the Fed printing presses, is a serious problem.