eli5: How does an economy grow if the money supply doesnt increase in that same year? In gold standard suppose, gold reserves are not increased but economy still manages to grow. How is that possible, how is an economy growing on a stable money supply?

Question

eli5: How does an economy grow if the money supply doesnt increase in that same year? In gold standard suppose, gold reserves are not increased but economy still manages to grow. How is that possible, how is an economy growing on a stable money supply?

In: 339

Answer 1

If you don’t mind me asking – who is this post aimed towards?

Playing devil’s advocate – the post also implies “economy growth can only come from increasing money supply” something you probably should flesh out a bit before we auto assume it to be the default assumption.

Since the gold standard hasn’t being used in most western countries for sine around half a century ago, this post looks aimed at a specific group of people advocating for this (rather than querying a general viewpoint).

Many economists advocate for slow inflation, and may only advocate for the gold standard if the rate it is mined is also low.