Am I wrong in saying that gold is not special for the basic classification of a currency? Is my understanding of what caused Europe to abandon the gold standard and banks to push so hard for fractional reserve incorrect? How is my assumption that deflation leads to needing higher profit margins because you have to compete with doing nothing incorrect?
Edit: Seriously, explain how the absolute bloody fuck you'd finance industrialization, with its massive explosion in goods and population, with a strict hard currency like gold coinage. What do you think happens to the currency during enormous economic growth like that?
I'd expect the cost of goods to drop like a rock, causing illiquidity problems because the smallest unit has become a sizable sum, and many people would stick to bare means instead of taking on any risk because the purchasing power of savings is exponential.
See? Garbled Keynesian bullshit.
Yes, you're wrong. Completely, utterly, failure-to-think-about-how-real-life-works
wrong.
Yes, deflation encourages savings. And that's healthy. Nothing wrong with that. The current constant
inflation is a draconian tax on saving and responsibility.
That is a problem. Deflation is
good. We need a metric fuck-ton of deflation, to correct the insanity of decades upon decades of inflation. Which we have suffered due to psychopaths (and their idiotic stooges) imposing fiat currency.
Here's what Keynes missed, and what you missed: people like to have things. People like to
live. To
enjoy life.
So what do you imagine? If there's deflation, nobody will buy food, because they'll have more purchasing power tomorrow? Everybody will elect to starve, because in some hypothetical tomorrow, they could buy two breads for the same coin? Of course not!
But let's consider luxury goods. Will nobody ever buy a new fancy television again, because next week it'll always be cheaper? No! That's something only an idiot who thinks in pure theory could believe! In short: Keynes, and psychos like him. In reality, people will buy a new television. Why? Because they want to
enjoy having it! Theoretically, if you delay to the last possible minute of your life to buy that new television, you'll get it at its absolute cheapest... but you'll only have it for one minute!
Time, my economically illiterate friend, is
also a scarce commodity. So if there is deflation, people will apply (consciously or unconsciously)
economic calculation. They'll weigh the potential advantage of waiting (more purchasing power in the future) against the potential disadvantages (having to wait to enjoy the thing in question, potentially longer than they may
want to wait).
If what you said was true, nobody would ever buy clothes except in the off-season when they can get a discount. And there are people who do! But hardly everybody. Many people want those nice, trendy new clothes
now. So they'll pay the full price for the pleasure of wearing this season's hot stuff... this season. Many people also buy the new iPhone, even though waiting six months might be a financially smart move. (But what about the gratification, the "coolness" of having the blitzy new thing
now?)
These are matters you have not considered. You have made the mistake of stopping to think of humans as humans. This is the great Keynesian error, and it has led to an economic catastrophe. The current inflationary nightmare destroys your savings, melts your pensions, kills your purchasing power, and distorts all economic relations.
Returning to a 100% gold standard will solve this. And it will not cause the purely imaginary problems that you have conjured up in your lack of understanding. It will not stop people from spending; it will only discourage people from spending
needlessly. And that's great. We live in a debt-ridden society full of irresponsible spending. It would be fine -- highly desirable, even -- to have a little more balance. To reward responsible frugality a little more.