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Author Topic: help me understand economic concept  (Read 619 times)
Breathe
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June 13, 2011, 05:54:56 AM
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Can anyone help me out with this? I can't quite get my head around it.

My teacher wants us to compare how economies adjust to changes in AD depending on whether they have a fixed or floating exchange rate.

I know it has something to do with being unable to use expansionary monetary policy, but other than that I'm stumped.

Thoughts?
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Alik
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June 13, 2011, 06:38:37 AM
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Just tell her to buy silver. Over the next couple of years when silver exposes it's true value, she'll give you an A. Smiley
Lea Calot
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June 23, 2011, 04:17:44 AM
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Maybe look at both scenarios from a crisis perspective.

If you have floating exchange rates (FIAT) and you can inflate your money, you could end up in a hyperinflation: http://en.wikipedia.org/wiki/Hyperinflation
If you follow a strict gold-backed standard you may end up in a deflationary spiral: http://en.wikipedia.org/wiki/Debt_deflation

If you pretend you have a gold-standard but pursue an inflationatory policy, things also get interesting Wink http://en.wikipedia.org/wiki/Bretton_woods_system

And with respect to buy silver, that is actually not that far off Cheesy
"Today, there is no government agency, that would pay for the payment promises of Alexander the Great, Julius Caesar, Louis XIV, Peter the Great, Napoleon or Hitler. They were powerful men in their time, but no bank will cash their checks today. If you take a gold bar, however, that once lay in their treasuries, you will receive its equivalent value anywhere in the world. The durability and universality of gold gives it a money-like authority, that no other money has." (William Rees-Mogg – former chief editor of the London Times)

Feel free to donate some coins to support P2P fault tolerance research: 12RZ1yWi4KT5JU81EePo52HS3mrhSCXswm
TigolBitteez
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June 23, 2011, 04:44:17 AM
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Look up FREEGOLD by FOFOA. So long as Gold is left floating and the currency is attached to gold, you can have the best of both worlds.
truthcracker
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June 23, 2011, 06:11:20 AM
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 Grin Yeah, guys in a basement make stuff from nothing that's limited and divisible, then try and convince people to give them real shit for it.

Others speculate on weather they can ride the wave and dump it on the next guy.

The geeks just talk about how great the technology is.

The wide eye'ed gov haters are in love with it.

Get gold and silver unless your an idealist, a speculator, a minor, a drug seller or a geek in love.

Bitcoins 2.0 , 3.0 will be better and fairer.
Tronlet
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June 23, 2011, 09:20:18 AM
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Grin Yeah, guys in a basement make stuff from nothing that's limited and divisible, then try and convince people to give them real shit for it.

Others speculate on weather they can ride the wave and dump it on the next guy.

The geeks just talk about how great the technology is.

The wide eye'ed gov haters are in love with it.

Get gold and silver unless your an idealist, a speculator, a minor, a drug seller or a geek in love.

Bitcoins 2.0 , 3.0 will be better and fairer.

You see this troll here? Ignore the troll and he will go away. Smiley

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