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.

Politics : Foreign Affairs Discussion Group -- Ignore unavailable to you. Want to Upgrade?

To: LindyBill who wrote (43004)	9/10/2002 7:32:04 AM
From: maceng2	Read Replies (1) \| Respond to of 281500

Historical note regarding Keynes. In 1923 he published A Tract on Monetary Reform which identified Keynes as the foremost opponent of the 'official' policy of returning sterling to the gold standard at the pre-war parity with the dollar. When Winston Churchill put sterling back on the gold standard on 20 April 1925 Keynes immediately attacked the decision in the pamphlet, The Economic Consequences of Mr Churchill. econ.canterbury.ac.nz Note the words pre-war parity It was as if Britain wasn't bankrupted by WW1 and as if WW1 had not happened. Long live the empire. Ah here we go... a suitable FADG link.. theatlantic.com "The Economic Consequences of Mr. Churchill." He took the then Chancellor of the Exchequer to task for having brought the pound back to the gold standard too soon after the First World War and at too high a value. Keynes predicted dire economic consequences. He was right. The British economy stagnated, resulting in years of unemployment above 10 percent even before the Great Depression. Because Britain was still central to world trade, its deflation spread deflation around the globe. My only point is a non fiat currency is not necessarily bad for lower wage earners. High unemployment (another concern of Keynes that could be triggered by gold backed currency) is or should be a concern for everyone. More people working equals more money in the system for rich and poor alike. Overall I prefer a money system that governments and bankers can jigger with the least.

To: LindyBill who wrote (43004)	9/10/2002 7:58:28 AM
From: Ilaine	Read Replies (1) \| Respond to of 281500

As you know, one of the reasons that the Brits hated Churchill was because he went along with putting Britain back on the gold standard in the '20s, thereby decreasing the money supply and causing misery for the lower classes. True but it was more than that. During WWI all combatant nations except the USA went off gold completely, and even the US printed some non-backed money. For reasons which we find baffling today, when Great Britain went back on gold after WWI, they resumed the old exchange rate (pounds sterling to ounces of gold) despite the fact that their money supply had greatly increased. This had the inexorable effect of causing massive deflation (I call it the Great Deflation). All other nations used a similar exchange rate due to the (former) primacy of Great Britain in trade. It was a fiasco, and the primary cause of the Great Depression. The so-called "easy money policy" of the New York Fed during the mid-1920's was an attempt to help Great Britain get back on gold. Interestingly, both Hayek and Keynes warned that the Great Deflation would happen. Churchill was an admirable man, but he made a lot of stupid mistakes. This was, in my opinion, his worst. In fairness to Churchill, I think he was given bad advice by his economic advisors. The mistake was his to make, as he was Chancellor of the Exchequer. One of the most fascinating tidbits of history, in my opinion, is that Churchill was at the New York Stock Exchange on the day of the Great Crash. I suppose you know that Hoover demanded that the Fed burst the 1929 bubble, it did not happen spontaneously. The Brits were unhappy because the bubble was sucking up all the liquidity. I expect that Churchill felt a great deal of satisfaction at the time.