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1929 was caused by excess credit issuance. True, that the gold standard was in place, but the spirit to keep credit in check was not. The federal reserve alread
by jonkho 5y ago
1929 was caused by excess credit issuance. True, that the gold standard was in place, but the spirit to keep credit in check was not. The federal reserve already existed, so this excess was made possible by their control of credit.
- WanderPanda 5y agoWhich makes me think that a gold standard has to always come with proper education about IoUs etc. Bubbles are only bad if people are deceived, because the proper way of riding a bust out by doing nothing (creative destruction) is too painful and may lead to political extremism.
- imtringued 5y agoWith a reserve currency like the USD the bust only happens in the USA while the boom happens outside of it.
- spiralx 5y agoWhich is why the US has been trying to discourage the use of the dollar as a reserve currency for well over a decade now. There are no real upsides to being a reserve currency (i.e. the strength of the dollar is because of the size and strength of the US economy, not because it is a reserve currency), and a big downside: financial problems around the world lead to the buying of dollars, causing the price to go up which makes imports more expensive and costs for American businesses and consumers to go up. https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-dollars-international-role-an-exorbitant-privilege-2/ https://www.brookings.edu/blog/ben-bernanke/2016/01/07/the-d...