i think the point here is that for the first time in quite a while the dollar has a legitimate _chance_ at hitting a doomsday scenario. whether or not that happens remains to be seen, but the odds are greater than they have been historically.
keep in mind that during the depression we were on the gold standard, thus there was none of the inflationary/deflationary risk of a fiat currency..
"keep in mind that during the depression we were on the gold standard, thus there was none of the inflationary/deflationary risk of a fiat currency"
Sure there was. Gold as currency is just as susceptible to instability as anything else, as a simple thought experiment can show.
Consider that the supply of gold, though growing, grows extremely slowly. The supply of goods and services which are exchanged in economic transactions (and for which currency acts as a proxy), however, goes through great spurts of growth which the supply of gold cannot hope to match. Thus, a gold standard during such a spurt can only lead to widespread deflation (as would any currency which failed to keep pace with the quantity of goods and services it must stand in for).
I really don't know why people harbor this mystical belief that a shiny piece of metal is somehow immune to well-understood economic principles.
"i think the point here is that for the first time in quite a while the dollar has a legitimate _chance_ at hitting a doomsday scenario. whether or not that happens remains to be seen, but the odds are greater than they have been historically."
The odd thing is that for most of that time period, there were always folks saying that we not only had a chance of hitting the doomsday scenario, it was virtually certain. The first time I encountered people saying that the Fed was destroying the money supply and we would all be doomed to hyperinflation and a survivalist existence, it was 1991 and I was 10 years old (it probably would've been earlier, but my dad wouldn't let me read his newsletters before then). And folks were certain it would happen by the end of Clinton's first year in office...no wait, by 1997...no, at the Millenium...no, by 2005...no, by fall of 2006...no, 2007 will surely be it...YES, finally it's 2008 and the world's falling apart, except it's going to get a lot worse by 2010!
Kinda like the boy who cried wolf.
"keep in mind that during the depression we were on the gold standard, thus there was none of the inflationary/deflationary risk of a fiat currency.."
Then why did it deflate so much from 1929-1932, or inflate so much from 1932-1937?
Gold was the transmission mechanism for international deflation during the Great Depression. Recovery started in country after country roughly six months after abandoning the gold standard. Countries which depreciated/unpegged their currencies recovered much faster.
Large sample regressions with graphs, detailed timelines and other supporting data in Eichengreen's Golden Fetters.
keep in mind that during the depression we were on the gold standard, thus there was none of the inflationary/deflationary risk of a fiat currency..