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Pastimes : Book Nook -- Ignore unavailable to you. Want to Upgrade?

To: JF Quinnelly who wrote (126)	3/30/2001 10:03:15 AM
From: Ilaine	Read Replies (2) \| Respond to of 443

Cool. We agree with each other, so it must be true. -g- I was trying to explain to the gold bugs that at some point the fraction of reserves of gold will be so low that even on the gold standard the money will be essentially unbacked. If you step back from the Austrian economy or the US economy and cast your attention to China, the rest of Asia, Africa, and South America, and take a look at the increase in the world's population, an increase in the global money supply is inevitable. The German hyperinflation was the result of deliberate actions taken by the German government in response to being pressured to make reparations. Hyperinflations are not inevitable. My perception is that by 1929 the flaws in the gold standard were patently obvious. If you visit the microfilm room of your public library and start reading the July 1, 1929 New York times and go on from there, you'll see what I mean. The physical gold had to be shifted from country to country and they were always squabbling over it. Every time it was shifted out of one country to another their stock market would go down. They were raising interest rates to try to attract deposits just so they would have gold even though the rates were not otherwise financially good decisions. The Fed and the Bank of England were trying desperately to hold the line instead of going with the flow. Austria's big bank problem arose from losing their Eastern European empire. It didn't help that the Smoot-Hawley tariff cut trade to the US by 80%, but there were global trade barriers, e.g., Czechoslovakia set up one that cut trade to there by 73%.