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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: TobagoJack who wrote (5468)7/1/2001 11:37:27 AM
From: Seeker of Truth  Read Replies (1) of 74559
 
That's a great article, Jay. It convinces me that the gold standard keeps bankers reined in, in a healthy way. I have two minor disagreements with him. One, the depression was not only caused by excess money supply leading to a bubble and its collapse; it was also caused by rabid protectionism, as in the U.S. 1931 reaction to the situation. This protectionism completely contradicted the previous trend which was globalization. Two, there is a political matter. It's not only the welfare statists who want inflation. The capitalists have been fond of this also. Inflation deceives the workers for a while as they think they are getting 10% more each year. It takes a few years for them to see clearly. It also helps the reactionary parties who wildly promise to provide everything AND reduce the taxes. An example of this is the Bush administration which has shifted the emphasis from debt reduction to tax cuts. That's the first step. Next they may increase things like arms spending to the point that the surplus disappears and deficits will reappear, to be waved away as temporary. Inflation also helps the billionaire who is in heavy debt with fixed interest. In brief there are few dedicated fans of sound money and restricting bank lending. I think Greenspan and his like ARE listened to, for a time but then everybody says inflation is gone and the temptation to take profitable advantage of this belief gets too strong. Gore had more economic principles than Bush but where did that get him? Promises of huge tax reductions won that.
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