From: Blanc Weber <blancw@microsoft.com>
Date: Mon, 2 May 94 12:26:34 PDT
To: cypherpunks@toad.com
Subject: RE: The American money capture
Message-ID: <9405021827.AA14132@netmail2.microsoft.com>
MIME-Version: 1.0
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From: Hal Finney & Eric Hughes

>(Today, with our experiences of inflation in the 1970's and 1980's, it is hard
>for us to appreciate the problems with deflation.  But I think deflation was
>much worse.

The Great Depression was pretty clearly caused by deflation in the
money supply.  To quote Milton Friedman:

	"All told, from July 1929 to March 1933, the money stock in
	the United States fell by one-third [...]"
		Capitalism and Freedom, p. 50
....................................................

Would it be too complex and lengthy an explanation to provide to say 
how the money supply is decided in the first place; that is, how an 
appropriate amount of it is calculated initially?  Is this in reference 
to the gold or other backing which gives each dollar its monetary value?

Blanc