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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 (71782)	10/12/2006 3:23:57 PM
From: Tommaso	Respond to of 110194

Also in the same Wikipedia article: "In 1925, Winston Churchill, then Chancellor of the Exchequer (seen as a stepping stone to Number 10 Downing), attempted to return Great Britain to the gold standard with a series of steps which would gradually have restored convertibility. However, it was also a goal to reverse the price increases, which required a contraction of the money supply. The resulting economic downturn both chased Churchill from the fast track to power, and created a government crisis. This was the leading edge of the global downturn now known as the Great depression, and with it came a seeming bind for monetary policy and economic theory. On the one hand, it seemed that suspension of the gold system would lead to paper money and either high inflation or hyper-inflation; on the other hand, the mechanisms for maintaining the gold standard -- government austerity, higher taxes, monetary contraction and higher interest rates -- led directly to severe economic collapse, unsustainably high unemployment, and agitation for communist or other radical forms of government. John Maynard Keynes was one economist who argued against the adoption of the pre-war gold price believing that the rate of conversion was far too high and that the monetary basis would collapse. He called the gold standard “that barbarous relic.” This deflation reached across the remnants of the British Empire everywhere the Pound Sterling was still used as the primary unit of account. In the UK, the standard was again abandoned in 1931. Sweden abandoned the gold standard in 1929, the U.S. in 1933, and other nations were, to one degree or another, forced off the gold standard."