> Now on to Jim's objections. I'll skip the arguments about Keynes and crashes > and so forth. (Like I've got time to fight a religious war, sheesh. (Though > actually, I am curious to know how Argentina fits in on the goldbug side of > the argument. Isn't a dollar-pegged currency as close as modern finance gets > to a national gold standard? And isn't that what did the poor bastards in? > (Oh cripes, now I've done it -- onward, Christian soldiers!)))
It's one thing to oblige oneself to pay out dollars for each Peso in circulation; It's another thing to have the self-discipline to limit the number of Pesos that one puts into the system, to the number of dollars available for redemption. It's the same problem the Federal Reserve had in the 1930s. It's simply not possible to build an elastic currency, while backing it with an inelastic currency. After the Federal Reserve was created around 1912 or 1913, they pumped money into circulation, (but the dollar was still backed by gold). Much of this new money found its way into the Stock Market which reached new all-time highs. After the stock market crash, a 'run' began on the currency and people were turing dollars in for the gold coins which backed them. By 1933, there was only a small fraction of gold left to back-up the existing dollars, and the Fed was reeling money in at a tremendous rate. This caused the tremendous deflation of the dollar which caused so much upheaval. Imagine having a mortgage for $20,000 and a salary for $10,000, which after the currency deflation, should have been only HALF that. Companies couldn't reduce wages to the point they needed and were forced to shut-down and lay-off. Debts became tremendous burdens because there wasn't enough money in circulation to service them. They had to stop reeling the currency back in, and this is what FDR did. He stopped the deflation, and despite the long-lasting ramifications, he solved a problem which had been started twenty years earlier. The problem is not with a 'gold standard'. It is with those who don't have the will to maintain the one-to-one relationship needed to support that 'standard'. SnowDog --- You are currently subscribed to e-gold-list as: [email protected] To unsubscribe send a blank email to [EMAIL PROTECTED] Use e-gold's Secure Randomized Keyboard (SRK) when accessing your e-gold account(s) via the web and shopping cart interfaces to help thwart keystroke loggers and common viruses.
