I'll cite Monetary History of the United States. When the US was on a Bimetallic system (gold and silver), rural miners fought to extract silver. Because silver was tied to gold at a ratio of 33:1
Aha, I know exactly what you are talking about, I wrote a research paper on this topic and mentioned exactly what you are talking about. And no, that´s NOT proof that there was price inflation, that´s proof that a bimetallic standard is problematic if the government wants to set fixed ratios between the metals. Naturally the supply/demand of gold and silver can vary, and [therefore the ratios between gold:silver varies as well. The government should not set a fixed exchange rate between the metals because that rate would have to be constantly adjusted, and would never fit the market rate perfectly. I am for a single metallic standard instead, or if you want a bimetallic standard, let the exchange rate be flowing.
For laymen: During that time the gov´t said that 33 ounces of silver could be exchanged for 1 ounce of gold in banks and such, i.e. the government decided the value. But that ratio overpriced silver, so that people would aquire silver in order to exchange it for gold in banks.
An even more obvious example: If the government decides that you can trade a 2008 Pontiac for a 2008 ferrari at a 2:1 ratio (pontiac obviously overpriced). People would buy pontiacs like crazy in order to trade it in at the dealers to get the much more valuable ferrari, because the real market ratio might be 6:1.
So, JH´s example doesn´t address the issue of price inflation (just inflation for short) under a single metallic standard, or a bimetallic standard even, because the prices of goods and services wasn´t inflated, the price of silver was, i.e. not inflation as we commonly refer to it as.
So JH, is there any example of inflation in a country where the government doesn´t meddle with the exchange rate of its bimetallic standard, or inflation in a country that has a single-metallic standard.
I bet these hard currency folks would be suprised that every antion went off these standards during war...
Not at all. In fact this argument is pulled up all the time by hard currency advocates. It shows that governments will go off the standard in order to fund wars. So what does this show us? That governments benefit from fiat money, and consumers lose out on it. How does that work? Well, the market takes a while to adjust to an increase in the money supply (raise prices, i.e. inflation). The people who gets to spend this newly created money first will benefit because prices haven´t adjusted yet, i.e. their purchasing power is still great (This is called the Cantillon Effect or the Injection Effect. Mises also calls it something different, I forget). When prices have adjusted your savings are now worth less, but the government has managed to buy some tanks with the money created out of thin air before the money was devalued (which is price inflation, i.e. inflation).
What we know is that when we had hard currencies, our boom bust cycle was VERY prounounced. After abandoning the gold standard, we've had whats called "the great moderation"
Not exactly. The depression happened after the metallic standard was abandoned, didn´t it? That was a pretty big boom.
Also, is it that much more moderate now?
