Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: patron_anejo_por_favor who wrote (88803)	3/19/2001 9:00:43 AM
From: Hawkmoon	Respond to of 95453

While they lowered interest rates, they were forced to fend off a run on the dollar during 1931, where folks were converting to gold. The decrease in gold stocks held by the government created a tight money supply since outstanding credit and cash was supposed to be backed by a certain quantity of gold. This was the contrast... they lower rates but the requirement to defend the currency against a gold standard reduced the effectiveness of those rate cuts. Having to defend the currency meant that large banks were leery about making new loans or acting as the lender of last resort. So even with essentially "free money", there were few banks willing to loan any out. Otherwise known as the classic liquidity trap, which in the US case, led to devaluation of the dollar and confiscation of it's competitor, gold. Regards, Ron