Wealth distribution

[Ironside]

Why must the money supply be ever growing? What is the result when it stops?

If you have an increase in total wealth, then you'll need more money to facilitate it. Inflation is prefered since spending is prefered. One meassurement of how much money exists are how fast the money changes hands. The more hands, the more people has actually done something with the money.

A stopped growth would be problematic yeah. But that isn't exactly helped by the gold standard. The big flaw with gold standard are that it's a limited resource. That means two things. First, without finding more gold, the amount of money can't increase. That means that for me to get more money, someone else has to lose money. A 0 sum game instead of growth. The second is that gold may have a fixed price in that standard, but that doesn't mean that gold has a fixed price in reality.

Say that Indian gold jewellry is going up (again). Then you can get the funny situation that none wants to sell gold to the US for money, because Indian jewellry gives twice as much. Or the Swedish goverment sells the gold reserve to India for jewellry and gets payed twice as much. Then they'll ask the US to trade that money for gold. Repeat until the gold market breaks or people shuts down the market because you're breaking the system.

To put it simple. It's very easy to break the gold standard nowadays. Spain broke their own silver market historically. By finding too much silver in the new world.