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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Tommaso who wrote (71776)	10/12/2006 2:24:37 PM
From: bart13	Read Replies (2) \| Respond to of 110194

I am afraid that this statement is not correct. The United States spent decades getting the country back onto a full gold standard after the Civil War, and this kept a pretty rigid leash on the money supply, which in fact shrank during that period. This, along with increasing productivity, made it an era of declining prices. Ever since the U. S. went off the gold standard, and especially since it stopped converting dollars to gold by other central banks, there has been nothing but inflation, with period of reduced or dis- inflation. The issue is whether continuous inflation is, on the whole, better than periods of deflation, especially severe deflation resulting in--or accompanying--a depression. I think moderate inflation probably is. People who lived through--and were affected by--the considerable inflation of the period 1970-1980 were not psychologically crippled the way that a lot of people who suffered through the period 1930-1940 were, when unemployment hit 25% and was even worse than that in its effect because many women were not even in the labor force. I'm afraid you are mistaken. You and one other gent keep making statements about gold and the money supply but has of yet to note any facts, whereas I've at least posted a few charts with money supply data showing that the connection between gold and the US money supply during the periods in question is poor. Do note that I'm note referring to any periods prior to the roughly the existence of the Fed, as you seem to be assuming, and incorrectly. We could go into money supply stats in the latter 1800s and I have the data from NBER, the Fed, etc. to show that money supply did indeed grow a lot during that period. But its still not germane to my original point about the tenuous at best connection between gold and the money supply post 1932-3, and also including 1913-1932 to a lesser extent. I am also in no way saying there has been no inflation since then and for you even to refer to it is odd at best. And I'm certainly not referring to anything in your whole 2nd paragraph. What is it that you think I'm saying anyhow (seriously - I'm not asking this sarcastically)?