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To: Ilaine who wrote (370)	9/3/2001 11:58:42 AM
From: Don Lloyd	Respond to of 443

CB - ...The reason people living on farms and otherwise in rural areas got so angry about silver was that the wholesale prices for agricultural and other basic commodities fell at the rate of 3% per year... According to Greenspan (I'll leave finding the quote to you), US Agriculture has suffered/enjoyed an average annual increase in productivity of 3.5% per annum over (say) 150 years. I presume this to be primarily labor productivity and to be an inflation/deflation adjusted number, if required. So it would appear that farmers have been being driven out of business for centuries, and monetary issues are likely subsidiary in the long run. Regards, Don

To: Ilaine who wrote (370)	9/4/2001 12:32:04 AM
From: JF Quinnelly	Respond to of 443

Convertibility of currency into gold was suspended during the War and for something like 10 years after it- thus the reality of "returning to the gold standard" sometime around 1876. The reason for going off the gold standard was that Lincoln printed Greenbacks to finance the War, and anyone who could would exchange the inflated Greenbacks for specie. The Greenbacks left an echo in American currency at least as far as 1963- you would still see U.S. currency labelled "U.S. Notes" issued along with the more common "Federal Reserve Notes". The U.S. Notes were the notes first issued as Greenbacks- but since there is no functional difference between US Notes and Federal Reserve Notes they stopped printing the US Notes. A loss for us history buffs.

To: Ilaine who wrote (370)	9/4/2001 12:47:18 AM
From: JF Quinnelly	Respond to of 443

...switching to silver or bimetallism in 1896 would not have been good, either, because the gold standard was entering an inflationary period. Id. He doesn't say why, but I guess that's in another paper. The Klondike gold rush was in 1897. The first South African strike was in the 1870s, with the largest strike occurring in 1885. The cyanide process for refining was developed in 1890. These all would have contributed to the gold inflation of that era.

To: Ilaine who wrote (370)	9/4/2001 1:25:50 AM
From: Don Lloyd	Read Replies (1) \| Respond to of 443

CB - ...since Austrian economists only think an increase in the money supply is inflation. ... Not quite. "...In theoretical investigation there is only one meaning that can rationally be attached to the expression inflation: an increase in the quantity of money (in the broader sense of the term, so as to include fiduciary media as well), that is not offset by a corresponding increase in the need for money (again in the broader sense of the term), so that a fall in the objective exchange value of money must occur Again, deflation (or restriction, or contraction) signifies a diminution of the quantity of money (in the broader sense) which is not offset by a corresponding diminution of the demand for money (in the broader sense), so that an increase in the objective exchange value of money must occur If we so define these concepts, it follows that either inflation or deflation is constantly going on, for a situation in which the objective exchange value of money did not alter could hardly ever exist for very long. The theoretical value of our definition is not in the least reduced by the fact that we are not able to measure the fluctuations in the objective exchange value of money, or even by the fact that we are not able to discern them at all except when they are large. ..." econlib.org Regards, Don

To: Ilaine who wrote (370)	9/4/2001 10:06:03 AM
From: Mike M2	Read Replies (2) \| Respond to of 443

CB, you said " I realize that Austrians don't believe in velocity" I don't know where you got that impression. Lionel Robbins notes in his "The Great Depression" how monetary velocity slowed and has a chart of it on pg. 19. Velocity slows because people run down cash balances during the boom and seek to rebuild cash balances after the bubble pops. That was interesting about Robbins rejecting Austrian economics later in life. mike