AP US History
Hard Currency: Sound Money or a Cross of Gold? 1) Since the amounts are fixed, deflation will cause the amount to be lower each month for him. If the rates were not fixed, he’d be angry but having fixed rates keeps his cost low and the lender loses out. 2) Even though farmers can buy goods cheaper, they have to sell theirs cheaper. Also the money it takes to ship will still be present. Buyers are needed as well and they don’t want to pay much if they don’t have much money either. If prices fall, they may have spent more on buying goods and now can’t sell their goods for a profit. 3) For a lender who receives payments, deflation can be good. If they lend someone $100 in gold, and now price drops, the borrower has to pay back more gold to equal that $100 since each piece is worth less. Then, when there is a rebound of the economy, they have more gold which is worth now more than the original $100 they lent. 4) Had the government had a tight policy on money, farmers would not have been beneficial, they supported a loose money policy because it would help them regain some money if the government kept printing/making more money. The loose money policy would relieve pressure on debtors and promote economic activity. -------------------------------------------------
5) Personally, there is not a problem with paper money rather than gold. This change may show progression. Realistically to believe that any country will remain the same is illogical. Countries need to advance to survive in the world; this may just be a sign of that. There may be a time that paper money is out and gold is back in, or maybe a third currency will arise, no matter what currency is in place, it must be working for that time period. Thus, there is no need on my part to worry. 1) Loose money policies were favored by the farmers and more rural people, tight money policies were favored but lenders and the urban people. By saying that he wants the masses to be prosperous, Bryan is...
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