Matthew O’Brien makes one obvious point: anyone who believes that the gold standard era was marked by price stability, or for that matter any kind of stability, just hasn’t looked at the evidence.But, not so fast, says CNBC's John Carney. He demolishes O'Brien's and Krugman's critique by explaining that:
What makes this [critique] so odd is that “price stability” is not a central claim of real-life advocates of the gold standard.And who does John consider the "real-life" advocates of the gold standard?
The so-called Austrian school of economics, the most prominent economics school advocating the gold standard...Carney goes on:
[The Austrian School] is actually quite notable for its criticism of the very idea of “price stability.”Carney then uses Austrian economists Murray Rothbard, Joesph Salerno and Jeffrey Herbener to advance his point.
Carney's article is the most sound presentation of the Austrian School's view on gold with reference to price stability that I have ever seen in mainstream media. Carney gets it.
To carry Carney's point a step further, the Austrian school sees falling prices. as opposed to stable prices, as an ideal economic environment. Because of the money printing the Fed does now, there are only a few items that regularly fall in price, at present namely computers, cell phones and flat screen televisions. If the Fed stopped printing money, most other products would begin to regularly fall in price as productivity increased. Three cheers for unstable, falling prices!
Carney's article is a must read and can be found, here.