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To: ahhaha who wrote (81572)	3/16/2001 2:05:39 PM
From: Ilaine	Read Replies (1) \| Respond to of 436258

So far I am only looking at June - July, 1929. The simple fact is that there wasn't enough gold and there wasn't enough credit. Every time there was a liquidity crunch the stock market went down. I realize I haven't got to the fun part yet but from what I've read in contemporary sources the market problems really began (or started showing) in the summer of 1929. So far all I've got is pieces of a puzzle. In the last weeks of June, 1929, Germany started drawing an unprecedented amount of gold away from England, which depleted the reserves of the bank of England. There was also a large demand for gold in the US and a large demand for gold in France. The withdrawal of gold by Germany was reported to be not profitable unless Germany raised interest rates, but it wasn't doing that. On July 9, 1929, it is reported that an economist wrote in Banker's Magazine that if the true measure of bank credit outstanding was defined by the size of bank deposits rather than the size of the loans and investments held by banks then the past year had seen a deflation in the credit structure amounting to $200 million. This was contradicted by the majority of economists who said that the country was suffering heavy inflation. The definition the economist used was consistent with the definition used by the Federal Reserve, which was based, as I understand it, on Real Bills doctrine. Just more examples of the problems caused by how you define money. How can you define money if you can't define credit? Bank clearances at least give you a gauge of the velocity of money.