Johnj,

I would care if I were you. If you care to check you will find that the price of petrol in Zimbabwe is currently $Z 250,000 per litre, due to the complete collapse of the currency, and the people are starving.

It was interesting to read Terje on the evils of deflation, as (he claims) it cheats debtors and erodes commercial trust. You could just as easily say that the current policy of perpetual inflation cheats creditors and erodes commercial trust. With all the inflation we have had over the last 75 years a little deflation might bring things a little closer to parity.

The way the Americans are going with their profligate foreign spending, the Chinese may well dominate world financial markets in 20 years. The US has only had one financially smart president, FDR, who cleaned out the British holdings in the US and left the US with 80% of the world's gold in Fort Knox. It only took his successors 25 years to blow the lot.

If the Chinese come to dominate world finance, they may restore the Gold Standard, which is the only way to resore honesty in international dealings.

"Who cares" was just a cheap shot, but I couldn't resist the opportunity to use it.

Truthfully, I don't believe this issue rates very highly. In 20 years time China may be the world's dominant economic power. My money, however, is on the Chinese economy coming a massive cropper in that time. In either case Australia will be affected, but you need the wisdom of Solomon to really know what the impact might be.

This forum seems dominated by doomsayers, predicting petrocolapse, Islamic Jihad, forced interbreeding with "foreigners" etc etc. The world is in for interesting times, no question, but most of this stuff seems the fevered imaginings of pyjama-wearers who need to get out more.

I would suggest that a return to the Gold Standard is about as likely as a return to crinolines and button-up boots.

In response to my comment Perdsus said:-

"You could just as easily say that the current policy of perpetual inflation cheats creditors and erodes commercial trust."

And I would agree entirely. The point of monetary policy should be neither inflation nor deflation. Both cheat somebody and erode commercial trust.

In so far as deflation compensating for inflation this is true up to a point. If you are too loose in monetary policy this month and too tight next month then things may even out in a manner that has few victims. However to undo years of inflation with deflation is like knocking somebody over with a truck and then putting the truck in reverse to make things better. Typically you just flattern the same people twice.

During WWI Britian abandoned the gold standard and moved to a policy position that was inflationary. After WWI Churchill implemented a sharp dose of deflation in order to restore the pre-war gold price. The deflation impacted not just Britian but all commonwealth nations that fixed their currencies to the pound sterling. Churchills deflation was instrumental in the causes of the great depression (although there were other significant factors). Using deflation to correct past inflation is not generally a good idea. The aim of monetary policy should be price stability.

When is everybody going to realise that the money used in America today is not the Greenback but the US Dollar!
If you take a look back in History you will find the Greenback was a currency printed by Abraham Linkin and distributed free of charge to the Banks
Where as the money used today is a debt laden currency printed by the privately owned Federal Reserve System and is distributed for private Profit!