It was the gold standard which caused the recession to become a depression, as countries couldn't expand credit fast enough to fill the gap left by private sector deleveraging. As soon as US went off the gold standard, dollar depreciated against gold and other commodities (Jim Rogers is right when he says commodities went up in the 1930's, but that was after a huge plunge happened in early 1930's. And it was linked to dollar devaluation). As soon as prices started going up, industrial production went back up - including in mining. And that led to new discoveries of gold itself.
Wednesday, April 22, 2009
Lords of Finance
"Lords of Finance - The Bankers who Broke the World" by Liaquat Ahamed is the best book on the 1920's-1930's financial markets that I have read so far. Now I haven't read a lot about this time period, so it doesnt say much. But it is definitely better than "1929" by Galbraith in giving a context to the whole episode. Highly recommended.