The KGB Oracle Forums General Public Discussion (SPECIAL ACCESS) KGB Political Debate Central David Stockman on supply siders and tax cutters

This is bona fide Stockman - where he is right on the money.

As I have said before (though maybe not here, actually) Supply Side Economics is just Keynesianism for Corporatists.

Which doesnt mean I think taxes should be obscene in the leftist sense, but rather that huge deficit spending and thinking you are going to get a free lunch because real growth will outpace your deficit liabilities over time is just pie in the sky.

If the goal is only stability printing moderate amounts of money during periods of economic expansion is by far the best way to get there. It is overprinting and deficit spending that get us in trouble, they are common, but not necessary part of fiat currency system.

Problem with gold standard ideas and the like is that expanding money supply during growth times is difficult. If you have increase of productivity and economic growth you will end up getting constrained by your monetary system and will produce a measure of deflation that will limit growth. Advantage of a fiat system is that it can expand monetary system on demand to address this problem.

It can also print money and create bubbles, but that is not unavoidable. It can also speed up recovery from complete systematic collapse - you can't inflate away your debt, so starting with a clean slate becomes harder.

Did any nation in modern history went bankrupt while still holding to a gold standard?

There are a few ways to deal with that, but reserve and currency management is really a topic worth a thread (or book) of its own. Acknowledging that backed currency in itself in not a panacea for all economic issues lets move on for the time being.

While technically, it is theoretically possible to not create bubbles under a fiat system - the core problem is that the system itself is inherently politically driven. In theoretical terms, something that is hypothetically workable can quickly become unworkable when management of said system becomes the domain of politicians.

A core reason backed currency is favored by many, is the inherent restraint it puts on politicians.

Sure, over time.. if we assume for a second that our political class is capable of learning, eventually it may be possible to learn enough about the economic and monetary dynamic to evolve a comprehensive enough set of guidelines, laws, and regulations that result in the creation of the proper amount of money at the proper time and keep things flowing smoothly from a rational constructionist standpoint.

The problem, is even assuming that - I think it will still take literally several hundred more years of massive booms and busts to get there.