Almost everything that people say about the gold standard today is baloney. One of the most popular items in the baloney store is the notion that a gold standard system causes “balanced trade.”
The United States used a gold standard system for 182 years. So, we should know what the answer is, right? Does a gold standard lead to ”balanced trade”? Did the U.S. have “balanced trade” for 182 years straight?
You already know the answer, don’t you? It’s a total fantasy.
During most of the 19th century – the gold standard years – the U.S. experienced capital inflows, or what is known as a “current account deficit.” In the 1830s, the U.S. imported an average of $125.4 million per annum. By the last decade of the 19th century, this rose to $3,071.4 million per annum.
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