They didn’t teach monetary history precisely

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The following is a direct excerpt from Marty’s Bent issue 1122: “They Did Not Teach Monetary History With Precision.” Sign up for the newsletter here.

If you’ve ever had the displeasure of learning economics in college, or just had a pompous sheep who taught you why a strong monetary standard can never work, you’ve probably had a professor or the MP who blamed the gold standard for the Great Depression. They’ll drop the Great Depression line and laugh at you like you’re a fool for not realizing it. Well, as our friend Natural Money points out, that couldn’t be further from the truth.

Prior to the 1930s, many countries racked up insane debt as they rushed into World War I and attempted to fix the world by allowing for a massive credit boom in the 1920s that led to misallocation massive capital in the global economy. When markets collapsed violently and masses of people lost their jobs, executives pointed to gold and its relatively inelastic supply as the culprits of the economic collapse. Completely ignoring the two decades of debt the world racked up before the collapse. Despite the fact that the gold standard was not the source of the Great Depression, it was used as a scapegoat for almost a century in academic circles ruled by dishonest Keynesians.

Worse yet, the gas lighting doesn’t stop there, as Habemus Bitcoin points out, capitalism is blamed for the evils caused by monetary socialism in the form of unhindered credit expansion that leads to an economy with impure and imprecise price measurements which ultimately causes the market collapse. Capitalism is what many blame for the Great Financial Crisis of 2008 and the uneven economic recovery that followed. When in reality, the conditions that led to the crash of 2008 were the massive expansion of credit which made it possible for people who were not in business to receive mortgages to obtain them with incredible ease. The recovery was uneven as the government and the Fed printed trillions of dollars and handed them over to primary dealers who had privileged access to the Fed’s counter, which exacerbated the Cantillon effect and created a cave gaping between wealthy asset owners and middlemen / workers. to classify.

Systems with the wrong incentives have led to these economic disasters. These bad incentives led to massive misallocation of capital which led to inevitable downward volatility as systems collapsed on themselves. Bitcoin is here to bring pure, precise metrics and more conservative credit markets back to the economy and it can’t happen soon enough.

The next time a fart sniffer tries to tell you that the gold standard was the reason for the Great Depression, politely tell him he’s wrong.

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