Re: Fiat money can be as good as gold, possibly better...
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Credit deflation due to bank failures is not fun, of course, for the people who see their inflated savings wiped out in the bank failure, but there is no aggregate economic problem that results
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can you rephrase that or restate it b/c the way it sounds now it seems that you're saying bank failures have no negative aggregate economic impact.
is that the point you want to make?
if so i (and many others who have written papers on the subject) disagree strongly witht hat statement.
Barron
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Yes, that is exactly what I'm saying.
It's a good thing for the macro economy when bankrupt institutions are liquidated, because malinvested resources can be reallocated to productive institutions. It sucks for the people who own/are invested in/are owed by the bankrupt institution, but as long as it isn't some monopoly situation (like it's the central bank or something), then there is no aggregate problem for the macro economy.
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