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To: Pelham

Actually, the money supply was supposed to be increase by 69 percent. The article makes some reference to that.


19 posted on 06/05/2016 4:35:05 PM PDT by Tolerance Sucks Rocks (0bama's insane rantings prove that power deludes, and absolute power deludes absolutely.)
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To: Tolerance Sucks Rocks

Gold holdings were a primary part of the monetary base, and the ‘bank money’ aka ‘credit money’ portion of the money supply was built on this by bank lending. Revaluation of specie from 20 to 35 had the immediate effect of increasing the monetary base by a third, allowing a larger amount of credit money to be loaned against gold holdings.

It was the ‘credit money’ portion of the money supply that had evaporated as thousands of banks failed 1930-33. The gov’t couldn’t force banks to loan and therefore rebuild the money supply, but they could increase the base of ‘high powered’ money by revaluing gold itself. Not sure if that made any difference at all other than making Americans think that FDR was stealing their gold. Of course, during the Great Depression you were lucky to have a silver dollar to your name, much less gold, but the principle was still the same.


27 posted on 06/05/2016 5:17:20 PM PDT by Pelham (Barack Obama. When being bad is not enough and only evil will do)
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