Lets say the amount of gold in circulation is constant. If goods/services doubles and the money in circulation is the same then don’t prices go down? Prices would go down because you have the same amount of money chasing more goods?
Is this true?
ceterus paribus, yes.
Yes, but understand that the amount of gold used for money is normally increasing as people keep mining the metal. Furthermore, gold has alternative uses in jewlery, medicine and electronics, so as the price of gold goes up, less and less of it goes to alternative uses.
Historically in the US the mining of gold has keep slightly ahead of the deflation. The total inflation of the 19th century in the US was about 0.6% per year. Please note the govenrment intervened in the money system several times where rapid inflation was the result.
What is so wrong with increasing the purchasing power of money? I purchased my wide screen TV for 1200 and the next year a similar model was 1000 and now is 800. I am better off as are all the consumers of large TVs. The same holds for the entire electronics industry.
" If goods/services doubles and the money in circulation (same amount of money) is the same then don’t prices go down?"
if there were 100 goods and services in the economy and 100 ounces of gold in the economy…then 1 year later there are 200 goods and services in the economy but still 100 ounces of gold…that sounds like a lowering of prices.
why would ceteris paribus would have anything to do with that?