Against the gold standard

[atreyu42]

http://econ161.berkeley.edu/Politics...dstandard.html

• Countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escaped the Great Depression
• Countries that abandoned the gold standard in 1930 and 1931 suffered from the Great Depression, but escaped its worst ravages.
• Countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffered the worst from the Great Depression

Any gold bugs around?

[metalman]

Re: Against the gold standard

http://econ161.berkeley.edu/Politics...dstandard.html

Any gold bugs around?

don't bother me with your facts, man! can't you see these berkeley lefties are a pack of raving commies! of course they hate gold! you don't see right wing wing nuts like gary north quoting facts like these, do you? hell no! he avoids them like a kid steps over cracks in the sidewalk. bad luck. don't want to upset the fine tuned intellectual apparatus with these data!

gold is money! depressions are good for ya! now where's my glock. i gotta go to the convenience store for a pack of cigs.

[atreyu42]

Re: Against the gold standard

I think the answer is free banking:

Wouldn't 100% gold standard banking be better than free banking?

Fractional gold reserve banking arose spontaneously. 100% gold reserve banking has not. It's basically a theoretical construct. This should at least make one suspicious, but by no means dismissive. A 100% gold standard – or any other full reserve standard – is when the bank is not allowed to create more exchange media (e.g., paper money) than it can back by reserves at every moment.

This might seem like a good thing, but, in essence, it's deflationary. Why? It would keep money below the amount people actually wanted to use. Since the purpose of money is mostly for exchange on the market, anything that attacks this role is generally bad for money and the economy.

[metalman]

Re: Against the gold standard

I think the answer is free banking:

nothing wring with fiat money. nothing wrong with fractional reserve banking.

what's wrong is the government lending at a profit without sharing the profit with tax payers.

[bart]

Re: Against the gold standard

http://econ161.berkeley.edu/Politics...dstandard.html

Any gold bugs around?

What we & France & Britain, etc. were on in the 1920's was not a gold standard. Money creation rates were not limited or controlled by the gold on hand in the various countries.

[atreyu42]

Re: Against the gold standard

What we & France & Britain, etc. were on in the 1920's was not a gold standard. Money creation rates were not limited or controlled by the gold on hand in the various countries.

Bart, would you mind to further explain this? Thanks.

[bart]

Re: Against the gold standard

Bart, would you mind to further explain this? Thanks.

Happy to take a shot at it...

The basic idea of a gold standard in my opinion is to provide some sort of control over over the top rates of money creation. In other words, provide strong and positive restraint for the central bankers and scum and politicians.

The gold standard that was supposedly in place before 1933 in the US just plain didn't do that - in other words, it wasn't a "real" gold standard... for whatever reason or reasons.
The simplest proof of that (and overly simplistic) is the data from the 1912-1940 period, showing what happened with excess money and credit creation in the 1920s, which led directly to the Depression... and the Fed also blew it badly by not "printing" enough in 1929-32 to bring the money supply back in line with gold.
Overall the chart looks more like a roller coaster than anything.




Note that I'm playing fast & loose with many other factors like WW1 and effects from other central banks and the sorry state of understanding of that field we laughingly call economics, but hopefully at least I've answered your basic question.