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To: Ilaine who wrote (327)	6/9/2001 10:32:17 PM
From: Don Lloyd	Respond to of 443

CB - ...Why, if the Federal reserve made credit too easy circa 1927, did commodity prices come down? Not very much, in the US, only 2% from 1926 to July, 1929. For the same time period, Denmark -8.6 Spain -6.6 France -12.8 Italy -27.0 Norway -23.2 United Kingdom -7.2 Sweden -7.6 This is according to a publication of the National Industrial Conference Board, dated 1931, Major Forces in World Business Depression. It seems to me that if the US actually had an easy money policy, according to Austrian economic theory, prices would have gone up.... If farmers can borrow easily and cheaply, they will all plant and produce a glut and low prices for their grains, etc.. I suppose that the price of fertilizer might go up. I am operating in a power-saving brain mode, so no guarantees. -g- Regards, Don

To: Ilaine who wrote (327)	6/11/2001 11:43:47 PM
From: JF Quinnelly	Respond to of 443

Why, if the Federal reserve made credit too easy circa 1927, did commodity prices come down? Not very much, in the US, only 2% from 1926 to July, 1929. For the same time period, ..... It seems to me that if the US actually had an easy money policy, according to Austrian economic theory, prices would have gone up. Nope. The easy money policy simply acted to mask an underlying, powerful deflation in commodity prices (which would have been caused by advances in agricultural technology, by additional land brought into production, and other non-monetary factors.) If not for the easy credit policy, deflation of those prices would have been far more pronounced. The Fed was surely aiming for price stability; and as a result was fooled into thinking that they were, if anything, restrained in credit expansion. In fact a bubble was beginning. Austrians were the only school to warn of the bubble, so they must have been watching the growth in credit rather than watching prices.