Taking Stick of Money Today

When last I posted, I ended our short history of money noting, among other things, that money is no longer backed by precious metals as once it "was" (I hope to make the scare quotes more salient later). Even before Pres. Nixon removed the US from the gold standard in 1971, wild swings in our money supply drove the country into a Great Depression that few theorists foresaw. Few theorists today foresaw the current crisis, and that should be easily explained. We have, essentially, unlearned the lessons of the Great Depression, removing the legal speed governors and safety interlocks that prevented our economy from revving too out of control from 1934 to about 1980, pulling the final bit of monetary prudence away from the system in 1999.

For that reason, it is illustrative to go back to the heady days of 1929 and see the policies that brought down the economy . . . you know, the policies we have today . . . and maybe answer brucenstein's initial question about the weirdness of money. ( I'll try my best. )