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Originally Posted by Thymeclock
The whole point is that a currency that is tied to a precious or semi-precious metal is more stable than one that is only tied to a government's promise to pay.
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The US had a gold standard, then FDR made it illegal for Americans to own gold (except as jewelery). As for stability, look at the price of gold since the '70s, when it became legal to trade in gold. Stable? Not hardly. There have been wild price swings like '78-82, when it rose fourfold, then dropped by half.
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When it comes to inflation, the American government has been in denial for a long time: for more than a decade under the regimes of both political parties, they have taken the cost of fuel and food out of the inflation index.
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But the price of food hasn't gone up significantly over that period (at least going by my shopping cart index, which admittedly contains little if any processed food). If anything, it seems to have declined a bit. Or at least meats &c seem cheaper than they were before then.
Gas, of course, is a different animal. The price increases aren't being driven by inflation or changes in currency, they're driven by supply & demand. Basic economics: increase demand for a product in limited supply, and the price rises.
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What we see as inflation is actually devaluation. Inflation is really not about "prices going up"; it's really all about the value of the currency going DOWN.
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Not entirely. There's inflation which is not devaluation, prices going up (or coming down - checked housing prices lately?) that have nothing to do with the value of the underlying currency.
Again, to come back around to the "gold is stable" theory, there's no way any currency devaluation and/or price increase tracks changes in the price of gold. If gold was stable, then over time you should (assuming supply & demand are constant) see most goods & wages remain constant when denominated in gold, but that simply doesn't happen.