Chapter 90 2. Gold and silver: the pinnacle of price volatility

On July 13, 1974, the "Economist" magazine published a shocking report on the price statistics of the entire industrial revolution in Britain.During the 250 years from 1664 to 1914, under the operation of the gold standard, British prices maintained a steady and slightly downward trend for 250 years.In today's world, there is no other country that can continuously maintain such long-term price data.The purchasing power of the pound has remained surprisingly stable.If the price index was set at 100 in 1664, except for a brief rise to 180 during the Napoleonic Wars (1813), most of the time the price The indices were all below the 1664 standard.When the First World War broke out in 1914, the British price index was 91.In other words, on the gold standard, a pound in 1914 had more purchasing power than its currency equivalent in 1664 250 years earlier.

In the United States under the gold and silver standard, the situation is very similar.In 1787, Title I, Section VIII of the U.S. Constitution authorized Congress to issue and define currency.Section X clearly stipulates that no state shall stipulate any currency other than gold and silver to pay debts, thus clarifying that the currency of the United States must be based on gold and silver. The "1792 Mint Act" established that one dollar is the basic weight and measure of American currency, and one dollar is precisely defined as containing 24 pure silver.One gram, ten dollars is defined as containing sixteen grams of pure gold.Silver serves as the cornerstone of the dollar monetary system.The gold-silver ratio is fifteen to one.Anyone who dilutes the purity of the dollar and devalues ​​it faces the death penalty.

In 1800, the price index in the United States was about 102.Second, by 1913, the prices had dropped to 80.seven.Throughout the era of great changes in American industrialization, price fluctuations did not exceed 26%, and during the gold standard era from 1879 to 1913, price fluctuations were less than 17%.During the 113 years of rapid development of production in the United States and the country's comprehensive industrialization, the average inflation rate was almost zero, and the average annual price fluctuation did not exceed one.three%. Also under the gold standard, the currencies of major European countries also maintained a high degree of stability during the critical era of unprecedented economic development from an agricultural country to an industrial country.

The French franc, from 1814 to 1914, remained a stable currency for a hundred years. The guilder, from 1816 to 1914, maintained a stable currency for 98 years. The Swiss franc, from 1850 to 1936, maintained currency stability for 86 years. The Belgian franc remained stable for eighty-two years, from 1832 to 1914. The Swedish krona remained stable for fifty-eight years, from 1873 to 1931. The German mark, from 1875 to 1914, maintained currency stability for thirty-nine years. The Italian lira, from 1883 to 1914, maintained a stable currency for 31 years. No wonder Mises of the Austrian school spoke highly of the gold standard as the highest achievement of the entire Western civilization in the golden age of capitalism.Without a stable and reasonable currency measurement and measurement, the huge wealth creativity displayed by Western civilization during the stage of rapid development of capitalism would be unimaginable.

The highly stable price system formed by gold and silver during the natural evolution of the market can make all genius economic planners since the 20th century ashamed.Gold and silver as currencies are products of natural evolution, products of a real market economy, and honest currencies that humans trust. The so-called monetary weights and measures do not depend on the greedy nature of financial oligarchs, the likes and dislikes of the government, or the speculation of genius economists. In history, only the gold and silver currencies that evolved naturally from the market have achieved this. In this regard, only gold and silver can take on this historical task in the future, and only gold and silver can honestly protect the wealth of the people and the rational distribution of social resources.

Contemporary economists have a generally popular view that the increase in gold and silver cannot keep up with the increase in wealth. Under the gold and silver monetary system, it will lead to deflation, and deflation is the enemy of all economies. .This is actually a preconceived illusion.The fallacy that inflation is justified is entirely concocted by international bankers and Keynes to abolish the gold standard, thereby using inflation to covertly tax the people, stealing people’s wealth without showing any trace.The social practice of major European and American countries such as the United Kingdom and the United States since the seventeenth century has shown with irrefutable facts that the huge development of the social economy will not necessarily cause inflation. In fact, both the United Kingdom and the United States are in a state of mild deflation Completed the Industrial Revolution.

The real question should be, are gold and silver not growing as fast as wealth, or are they not growing as fast as debt money?Is the excessive issuance of debt currency really beneficial to social development?