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Comment by goodcanadian | Hacker News Reader

As a sibling comment said, gold was effectively money. Having more money, without having more products to buy, effectively triggered massive inflation. Prices went up, but the actual supply of goods and services didn't change much. The Spanish economy suffered massive inflation, as did Europe in general to a lessor extent.

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Notably, the 'massive inflation' was a rate of 1-1.5% per year...

Which, for the gold standard, is still rather shocking.

Well only with a fairly fixed amount of gold available. If suddenly a vast new supply of gold is discovered, its not shocking that there would be inflation.

Since the industrial revolution productivity has actually been increasing and automation continues to make this happen.

If you don't have a mechanism for productivity increase matching your inflation it's just making whoever is creating the new money temporarily proportionally wealthier until the money spreads everywhere.

It's interesting that mining gold and silver is similar to printing more money; we usually think of inflation as represented by debasing coinage but there's been a few circumstances where flooding the local economy with precious metals is the same effect.

We sometimes see similar localized effects when wealthy foreign governments and NGOs go into poor countries to "help" with foreign aid and investment. When done correctly this can boost the local economy in a sustainable way, kind of priming the pump. But often it just dumps a lot of cash in, causing price inflation as the supply of goods and services fails to keep pace with the supply of money.

Outside influence heavily distorts local economies and needs to be done extremely carefully or you end up making a few people rich and starving everybody else.

Heifer International presents a good face on doing this by introducing livestock, providing education to the new owners, and imparting an in-kind donation requirement so as to perpetuate and spread the gains.

Likewise charities that build clean water infrastructure, small scale solar, cell phone infrastructure, insulated cooking pots to reduce fuel use, and build infrastructure and training for basic medical care – these are all things that support increases in productivity by removing barriers and introducing efficiency into people's lives enabling them to do more, for their children to attend more school, for them to lose less time to illness and malnutrition.

Where just giving away food or money, especially on large scales distorts and ruins economies. Likewise introducing significant export markets when a local economy isn't ready.

Maybe, but not in this case:

> Early data from a sub-district pilot showed sharp reductions in extreme poverty and improved wellbeing with minimal inflation, showing direct cash is a scalable tool to accelerating the end of extreme poverty.

https://www.givedirectly.org/district-scale/

Perhaps things are different in Malawi?

That is an organization judging it's own success while a program is accelerating.

And if you measure poverty by how much money someone has and then give them money saying you've fixed poverty is tautology.

If your plan is to build a client state on perpetual welfare, well sure it's easy to be successful. But you can never leave and it's very possible that if you do leave things will be worse than if you had done nothing at all.

Whereas if you distribute a bunch of goats and chickens among a community and spread some education about raising goats and chickens, there's a good chance you've made a one shot permanent improvement to the quality of life of a community.

The criticism for giving direct aid in food and cash isn't that things are worse for the people you're giving them to while you're giving it to them... it's that you wreck the local economy for food and everything else because nobody can sell food when food is free and you can't price things correctly when money is pouring in. The money always stops and the aftermath is a disaster.

In the latter 1800 there wasn't enough gold to accommodate the vast increases in industrial production. Which was deflationary.

https://en.wikipedia.org/wiki/Cross_of_Gold_speech

You can imagine every year the price per bushel of the wheat you grow drops and your mortgage stays the same. When your whole economy is like that no one wants to borrow or lend money and investment slows.

No, inflation is just an increase in prices. Insisting it is only due to an increase in the money supply is an RW talking point.

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