Glad you listened to it. I agree with you that Mundell was talking about going back on the gold standard at the pre-war parity - however, the only country that did that was Great Britain, which was no longer the "hegemon" of the gold standard, the US was. I don't believe the US left the gold standard during WWI. The European combatants and Japan did. I don't believe that France or Germany went back on the gold standard at pre-war parity. I know for a fact that France devalued, can't remember what rate Germany picked, don't know about Japan.
It would probably be clearer if I read what von Mises actually said. Also, I need to read up on the Genoa Conference of 1922.
One thing I see, or think I see, when I look at price charts (CPI, PPI) worldwide (broken down by nations, too) for the time period 1910-1930 is that it looks to me like what happened was that after the rest of the world went back on the gold standard, commodity prices (wholesale) went back to where they were pre-war, as if the money supply acted as a ratchet and ratcheted them downward, followed by retail prices, more reluctantly. Which is what Mundell seems to be saying, and it seems to be exactly what one would have expected to happen.
The surprising thing to me is how many people understood this before it happened and while it was happening. The reason it surprises me is that one has to make an effort to find this. Children are not taught about it in school - we learned about Smoot-Hawley, the stock market crash, and the collapse of the banks, but never about the money supply or the gold standard. Yet, we did learn about gold and silver in the 19th century.
I've posted before that once countries cut loose from the gold peg, their economies started expanding again. The problem - I just realized this - is that it's silly to look at GDP for this - obviously prices went up when the dollar was devalued - I need to look at economic activity absent price, price will give a false reading. |
