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