ECON 1011 Lecture Notes - Lecture 4: William Jennings Bryan, Money Supply
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ECON 1011 Full Course Notes
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Benefits: taking away discretion from central banks, more volatility year-to-year, fixed exchange rates, good or bad, stable inflation, true over long periods, result of gold strikes in us. In short periods (5-10 years) a lot of inflation, deflations, rising/falling prices. Gold was discovered in california and the amount of gold in the economy goes up, that will cause an inflation, whereas if the economy is growing faster and there"s a shortage of gold, that will cause a deflation . Modern example: china tied to the dollar, has become more flexible. And those low interest rates may not be appropriate for china, and as a result china may experience inflation because it"s essentially tied to. So fixed exchange rates between countries tend to transmit both good and bad policies between those countries and take away the independence that individual countries have to manage their own monetary policy.
