The Bitcoin Standard: The Decentralized Alternative to Central Banking

by Saifedean Ammous

All of this was done to maintain prices at the pre‐1929 boom levels while holding onto the delusion that the dollar had still maintained its value compared to gold. The inflation of the 1920s had caused large asset bubbles to form in the housing and stock markets, causing an artificial rise in wages and prices. After the bubble burst, market prices sought readjustment via a drop in the value of the dollar compared to gold, and a drop in real wages and prices. The pigheadedness of deluded central planners who wanted to prevent all three from taking place paralyzed the economy: the dollar, wages, and prices were overvalued, leading to people seeking to drop their dollars for gold, as well as massive unemployment and failure of production. None of this, of course, would be possible with sound money, and only through inflating the money supply did these problems occur.