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Not a very convincing reply. Are you claiming that the printing of money unbacked by gold in a gold standard system didn't matter at all?

dodobirdlord 5y ago
Printing of money unbacked by gold in the gold standard system doesn't appear to have been significant, if it happened at all - the amount of gold reserves that the US treasury held and the money supply look like they grew proportionally during the period 1913-1929 [1, 2]. It would be nice to see user WalterBright's citation for this. Meanwhile, if WalterBright's explanation is to be believed we'd expect it to have manifested as high inflation rates during the period 1913-1929, and spiking inflation during the 1929-1930 economic crisis as everyone realizes that the jig is up and their dollars aren't actually backed by gold and are worth less than expected. Instead, that's not at all what happens [2]. The inflation rate is all over the place between 1913 and 1929, dramatically positive from 1916 to 1920, dramatically negative from 1921 to 1923, and then relatively stable until the Great Depression, including being slightly negative for the 4 years leading up to the Great Depression. Then the Great Depression hits and inflation becomes dramatically negative. The Great Depression starts in 1929, but FDR doesn't suspend the gold standard until 1933 in the interest of being able to expand the money supply and cause inflation. Inflation finally goes above 0% in late 1933, but even then doesn't spike dramatically - it spends a couple months in the 5% range before falling back and spending the next several years in the 2%-4% range. So WalterBright's explanation just doesn't line up. Credit to user the_why_of_y for pulling up sources in a different thread. [1] https://www.swcs.com.au/goldreserves.htm#Table1 https://www.swcs.com.au/goldreserves.htm#Table1 [2] https://www.longtermtrends.net/m2-money-supply-vs-inflation/ https://www.longtermtrends.net/m2-money-supply-vs-inflation/
- WalterBright 5y ago
  Net inflation from 1914-1929 nearly halved the value of the dollar w.r.t. the official exchange rate with gold. I cited this with references. There's no way you can talk your way out of that. Pegging a currency against something one has no control over, then inflating the heck out of the currency, always results in a crash. The banks continued to fail until FDR suspended convertibility to gold.

dodobirdlord 5y ago

Printing of money unbacked by gold in the gold standard system doesn't appear to have been significant, if it happened at all - the amount of gold reserves that the US treasury held and the money supply look like they grew proportionally during the period 1913-1929 [1, 2]. It would be nice to see user WalterBright's citation for this. Meanwhile, if WalterBright's explanation is to be believed we'd expect it to have manifested as high inflation rates during the period 1913-1929, and spiking inflation during the 1929-1930 economic crisis as everyone realizes that the jig is up and their dollars aren't actually backed by gold and are worth less than expected. Instead, that's not at all what happens [2]. The inflation rate is all over the place between 1913 and 1929, dramatically positive from 1916 to 1920, dramatically negative from 1921 to 1923, and then relatively stable until the Great Depression, including being slightly negative for the 4 years leading up to the Great Depression. Then the Great Depression hits and inflation becomes dramatically negative. The Great Depression starts in 1929, but FDR doesn't suspend the gold standard until 1933 in the interest of being able to expand the money supply and cause inflation. Inflation finally goes above 0% in late 1933, but even then doesn't spike dramatically - it spends a couple months in the 5% range before falling back and spending the next several years in the 2%-4% range. So WalterBright's explanation just doesn't line up. Credit to user the_why_of_y for pulling up sources in a different thread. [1] https://www.swcs.com.au/goldreserves.htm#Table1 https://www.swcs.com.au/goldreserves.htm#Table1 [2] https://www.longtermtrends.net/m2-money-supply-vs-inflation/ https://www.longtermtrends.net/m2-money-supply-vs-inflation/

WalterBright 5y ago
Net inflation from 1914-1929 nearly halved the value of the dollar w.r.t. the official exchange rate with gold. I cited this with references. There's no way you can talk your way out of that. Pegging a currency against something one has no control over, then inflating the heck out of the currency, always results in a crash. The banks continued to fail until FDR suspended convertibility to gold.