Hmm. Not sure which basic Econ books best deal with those issues.
You might start with Friedman's "Price Theory" (which you can get
online from his web site <http://www.best.com/%7Eddfr/>), but a more
general Econ work might be better. Monopoly-issued currencies tend
to inflate because the issuer can use inflation to essentially tax
every piece of currency they have issued, transferring some of its
value from the holders to the issuer, without having to go out and
steal it physically. Just double the amount of currency presently
in circulation; it's worth half as much, but now you own half of it.
> I know that's exactly the problem in America. The FED is a
> fractional-reserve system, isn't it? Also, ever since the Fed has been
> in existence, we've lost our gold standard, correct? Hong Kong still
> works on the gold standard? How well is their economy? ...
I don't want to get into the whole fractional-reserve debate here; I can
go to humanities.philosophy.objectivism for that. I'll just say that no,
I don't think fractional-reserve banking is a problem of itself; in fact,
I think it's a great way to do business. The problem is non-fixed value
currency issued by a monopoly.
No, Hong Kong is not on a gold standard. That sentence was a bit
ambiguous; I meant to say only that they have no government-issued
currency; their primary currencies are privately issued by two banks.
Their economy does quite well, but I think it would be unfair to
compare it to the US, which has so many more natural resources than
they do.
-- Lee Daniel Crocker <lee@piclab.com> <http://www.piclab.com/lcrocker.html>