It says that despite the inflationary restraints from the gold exchange standard, the Federal Reaerve continued to inflate because the price level was “stable” …thus setting the stage for the Great Depression.
Do you have any recommended readings on this subject of inflation targeting and how it relates to (any version of) the gold standard? I don’t think the term ‘inflation targeting’ is mentioned in Rothbard’s ‘A Monetary History of the United States.’ That book seems to just talk about how the Fed inflated the money supply…it doesn’t go into the reasoning behind doing so (ie, How could they? And were they trying to follow an inflation targeting rule?)
Also, presidential candidates like Ted Cruz are calling for fixing the currency back to gold. Are they essentially just saying that they want to control the money supply by targeting the price of gold — a policy that’s proven to be ineffective? (Note: Cruz supported the 2009 American Recovery & Reinvestment Act and believes that the Great Recession could have been prevented if we cut rates faster…so surely he can’t be advocating a return to the classical gold standard?)
Most central banks attempt to hit a target rate of price inflation of around 2 percent. If price inflation is below the target, the central bank accelerates monetary inflation and if price inflation is above the target, the central bank decelerates monetary inflation.
I suggest Joe Salerno’s book, Money Sound and Unsound: