Returning to the gold standard is not the answer (because the same folks that run the central banks and the governments own almost all of the gold in the world, and thus would still be able to manipulate the value of money by manipulating the supply of gold), but this excellent article does explain why the macroeconomic problems are simple to understand and solve -- but somehow the Fed conveniently fails to see that. -- KM


Inflation is childishly simple to understand, but economists like to remain confused. When a currency loses value, markets gradually adjust to reflect this new development. When the dollar's value falls in half, things that cost $10 eventually cost $20, more or less. It's no more complicated than that. The dollar's decline is best measured against gold – for centuries considered a stable measure of value. The dollar is now worth about 1/900th of an ounce of gold, compared to about 1/350th on average during the 1980s and 1990s. You can do the math yourself and figure out what this means for prices going forward.

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