Reddit mentions of Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (NBER Series on Long-term Factors in Economic Development)

You say that like gold is good and fiat money is bad. Fiat money is much more flexible, an there's decades of evidence showing it enables central banks to engage in useful, stabilizing monetary policy.

I don't buy the "Golden Fetters" theory entirely, but there's good evidence that the recession was worst in the countries that stayed on the gold standard the longest, and least bad in those that abandoned it quickly.

Great responses here. I'd also point people to Barry Eicgengreen's book Golden Fetters: The Gold Standard and the Great Depression which does a good job of presenting the evidence.

>>Did the crisis in Europe cause the Europeans to pull their gold from the US banks -- the mechanism of the gold standard transmitting economic calamity across the ocean just as in 1929 and so many other times?

>How is that "The mechanism of the gold standard"? Capital flight occurs whether the capital in question is gold, rice, potatoes, or greenbacks.

Because, when X causes a financial crisis on one side of the ocean, so defensive gold hoarding by business and individuals drives real interest rates way up, fueling deflation, bank and business failiures, thus more defensive gold hoarding, repeat, gold is pulled in as on a chain from the other side of the ocean.

The economy on that other side of the ocean may be purring along fine and be completely sound. But the sudden unexpected yank of great masses of gold from it is an X that causes a new crisis there. The sudden yank creates a financial market panic -- thus, the gold standard era Panic of 1873, Panic of 1907, and so many others -- which drives up defensive gold hoarding by business and individuals that drives up real interest rates and fuels deflation, bank failures, business failures etc.

This is what happend in 1873 going from Europe to America, and in 1929 going from America to Europe, then reverberating in waves around the world for years after.

Without the gold standard none of this happens. With flexible exchange rates for currencies -- the free market practice! -- the effect of the original crisis is absorbed by a change of the first nation's exchange rate. That changes the relative price of what that nation has to pay to buy rice and potatoes and gold (to use in tooth fillings) compared to people on the other side of the ocean -- but it doesn't bust any financial centers on the far side of the world by causing sudden Panics, money hoarding, deflation driving more money hoarding, bank failures, and all the rest.

It is no coincidence that the USA and every other nation left the collapse part of the Depression exactly when it left the gold standard, with recovery starting prompty. And it is not surprising that no nation has ever been tempted to go back to it.

I mean, read a book. One by a professional who has no axe to grind on the subject. Here's a good one.. (Though get it used or at a library, boy they've really upped the price!) If you fancy yourself an Austrian read Hayek. (For god's sake not Rothbard.)

>I never made an argument for the gold standard, just against the Fed

OK, so you are not for the gold standard and not for a fiat currency managed by a central bank. The third option is ... ???

BTW, just for the record, here is real GDP growth per capita in the USA from the end of the Civil War until the Fed started operating in 1914, and then since the creation of the Fed until today.

per capita annual real GDP growth:

1868 to 1914: 1.51%
1914 to 2010: 2.14% <<-- 42% more.

Make of that what you will. Just some information for you from Mr "Full Retard". :-)

It's always strange to me how people can be so confident in "knowledge" that is both incorrect and so easy to debunk. I'll give you some sources (and unlike your link, they're not just from some random dude posting to a forum lol). You won't read them, because if you were the type of person to risk having your worldview challenged with facts, you would have already learned that your whole concept of inflation and fiat is wrong.

Oh, and contrary to your prior statement, both the US and Britain were still on gold standards during the depression. You might have been confused by the switch from a gold specie standard to a gold bullion standard. Don't argue with me, argue with wikipedia. http://en.wikipedia.org/wiki/Gold_standard#Depression_and_World_War_II

Many economists argue that the great depression was "great" specifically because we were still on the gold standard (and so was much of the world, which is partly why our depression was transmitted to them).
http://www.amazon.com/Golden-Fetters-Depression-1919-1939-Development/dp/0195101138


And lastly, the 1800s faced several giant bounts of deflation, one so large that it is known in history as the "great deflation."
The Great Deflation (1870-1890) - http://en.wikipedia.org/wiki/The_Great_Deflation

Where would you begin? There are books dedicated to demonstrate particular instances of the gold standard being miserable.

Or we could just focus on why active adjustment of monetary policy is a good thing and provide some classic case studies of inaction. Another paper comparing policy choices.

Of course this will all probably be a waste of time if we don't first have a nice sit down chat about what inflation is.

Then they'll stubbornly ignore it as they've ignored more articulate criticisms of the gold standard. Might be slightly bitter about a past post on economic policy.

[Couldn't think of a pithy comment about fiscal hawks and Europe. Also lacking a good book on the panic of 1907.Shoutout to Kindleberg's Lender of Last Resort Relevant for the End the Feddies.]

Gold as a basis for a currency

The rigidity of the Gold Standard is widely believed to have caused the great depression.

As for property rights as an alternative to the EPA, you still haven't stated how individuals will succeed in court against big corporations. Even though property rights aren't as strong today, many people have tried to sue fracking companies like Range, but have lost in court because they could not prove 100% that their flammable water was coming from fracking chemicals. Utlimately, scientific things like pollution and global warming need to be handled by scientists, not judges.