[John Kilduff]

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The "gold standard" was abandoned because the gold supply does not grow at a fast enough pace to keep up with the growth of the economy. It is therefore inherently deflationary, and economically unsustainable.

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At this point I think I'd probably rather see deflation than inflation for a while. Why is deflation more evil than inflation?

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John,

Check the link I posted earlier on in this thread, it addresses this issue.

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OK, thank you. I've excerpted the statements that article makes about deflation (since my question was about deflation specifically, not about the overall concept of a gold standard):

"The third is that deflation is also bad, and at the lower percentage values, often even worse than inflation. "

The author is saying that most economists have "settled" or agreed on this. I can't quite be convinced by that because a "majority consensus" among economists used to be trumpeted as reason to support Keynesianism. I don't find appeal to authority or expert status fully convincing and especially not in Economics.

"This surprises/offends/meets with the frank disbelief of many "sound money" types, who think that, barring local shortage, in an ideal world everything ought to cost the same or less than it did when Grandpa was a boy. (These sorts of opinions are cemented further by the fact that Grandpa, who is often the source of them, is usually living on a fixed income, and therefore feels that he would make out better in a deflationary economy.) The problem is, deflation does rather devastating things to anyone who has debt, since they now have to repay what they borrowed in more expensive dollars."

So deflation is bad for those in debt. It also must be conversely good in the same sense sense for those who are debt-free and holding money. Is debt a thing to be encouraged? Generally speaking I would think probably not. Rather, savings and investment are the basis of future prosperity, so if anything should be encouraged I would think that those things should be encouraged rather than debt.

Deflation means that, thanks to the abovementioned sticky wages, the economy has to deal with demand shocks by lowering output.

The operative effect of supply and demand. That's the way it works and no amount of tinkering is going to change that; the effect can only be artificially mitigated to some extent and the mitigation must carry its own cost as well.

"Deflation can result in what's known as a liquidity trap, a concept pioneered by liberal economist John Maynard Keynes and best elucidated by liberal economist Paul Krugman back before he left economics writing to focus on his hatred of George W. Bush. Deflation is what made the Great Depression so memorable. Deflation is so bad that almost everyone agrees that moderate inflation, in the range of 1-2%, is better than risking even a small amount of deflation."

Again an appeal to authority/expert status/"consensus".

So while the article touches on the subject of deflation it doesn't do much to truly explain or convince why deflation is bad.

Thanks for reading and for any responses.