You ask why should it go down? My understanding is we tried other banking policy during the great depression and it didn't work out so well. When the economy collapses and the government lacks gold backed dollars to do counter cyclical spending because there's not enough gold reserves it doesn't go well.
So my response would be because great depressions are not desirable.
But what I really don't understand is the outrage that the money under the couch should go down- when assets like treasury inflation protected securities are available. (Yes they are not always available at profitable rates- though they currently are- and I don't think the people complaining about inflation are whining when stocks or Treasuries or bank accounts are paying more than inflation.)
> When the economy collapses and the government lacks gold backed dollars to do counter cyclical spending because there's not enough gold reserves it doesn't go well.
Probably shouldn't be using this logic when the dollar is no longer tied to gold or any other physical asset though. There's a world of difference between a dollar based on gold and a dollar based on confidence in the US government.
And I was saying that the dollar is no longer backed by gold, or tied to any other limited resource, so why would we assume that the same scarcity-driven dynamics are still in play?
So my response would be because great depressions are not desirable.
But what I really don't understand is the outrage that the money under the couch should go down- when assets like treasury inflation protected securities are available. (Yes they are not always available at profitable rates- though they currently are- and I don't think the people complaining about inflation are whining when stocks or Treasuries or bank accounts are paying more than inflation.)