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Diagrams of the prices of oil and gold (Chapter 1) show that the securities market was not the unique market which has increased with frequency rate 10.
In 1840th years, the beginning of our economic era, the country was in the depression similar which we never saw. Within 1820th years the government created budgetary surplus and has practically finished to absence of a debt in general. In 1835 and 1836 the federal debt made $38,000 having gone down from size of $127,000,000 in 1816. Keep in mind that $38,000 were not the huge sum of money, even those years. The majority of these $38,000 was made by the short-term debt paid when it has collected. In other words the monetary weight in circulation not only was reduced, but there was no money to assign necessary economic and industrial growth. Andrew Jackson has destroyed Bank of the USA. The financial institutions which are still being in an early stage of development, had few means of creation of money in a private sector.
' Hungry the Fortieth ' so this depression which did not come to an end before opening of gold deposits and a gold-rush of 1849 was called. The gold-rush is the natural version of inflation. Without some inflation or new sources of money or gold the increasing population has no enough currency to operate the economy. The increasing population and growing economy should have the growing monetary weight in circulation to hold a price level and to assign the further growth. A problem in where it to take. In the previous heads we have found out that riches bases it is the material goods and an earth abundance. The USA certainly have raw materials on which it is possible to create the capital for the further industrial growth. Then the capitalist system has not been completely developed. Actions, participation in the future efficiency, is the best if not a unique way to finance growth as lifting is always connected with efficiency and the investor never demands money back from the company. Like gold, the joint-stock debt never goes back to the earth.
The Fast growth financed by a public debt and a private debt which should be returned, is the money created before any efficiency which should be paid on efficiency peak. So 1920th years, like 1980, borrowed money at the future to create financial ' bubbles ' which could not be supported.
If you take your profits before have made, you do not have profits when you have made, and there are no funds to finance the future production, except for a constant climbing in debts.
That it is important concerning 1840th years and a gold-rush, that new gold also created inflation if inflation is defined as a prompt rise in prices too much. The city with a gold-rush has the same fury and inflation, as any economy which has tested sudden or big increase of its trading means. If new dollars are entered into economy, the prices grow. If new gold or new sea bowls, or bones are brought as extraction in breeding war in economy, you spend more that you want. It is necessary to gold to get into economy, and it never will leave it. Costs to the cost created by joint-stock certificates, to enter into economy, and it never leaves. Costs to the money generated by a federal debt, to enter into economy, they should leave never. When it occurs, depression is guaranteed.
Depression as we know, it actually a deflation. If economic regulation is connected with a deflation, the prices will fall too much, and everyone will receive less and to require in smaller, to get things which stand now less. Though regulation is difficult on a way downwards, it only a lifting backspacing. Lifting is easier for operating. Upwards always looks better, than downwards.
The Corporation has delay time between raw materials acquisition, payment of wages and receipt from sale. If it is going to do profit should have a sale price above, than expenses. Inflation guarantees that account books will always look well.
The Worker receiving wages, on the other hand, should pay higher prices before will promote salaries.
In deflationary economy the company buys the goods, pays the high salary, and sells more low. At deflationary time of a delay lower expenses pass in lower sale prices. Many companies leave business. Workers lose work or are compelled to agree for lower salary. Thus inflation is much more convenient for economy as whole, than a deflation.
It is obvious that extraction of money from economy the government of the USA was one of principal causes of depression of 1930th years. It was not the unique reason. Gamble and marzhinalnaja purchase have created tons of illusory money. The international non-payments under loans and bankruptcies of banks have reduced monetary weight in circulation, and duties ' have killed ' our international trade, typical consequences of Plutona.
On purely technological level it is represented that 10-time-ovaja frequency rate is a point where inflow should stop for a respite as it coincides with natural rotary points of economic movement which become much more obvious in the head about cycles. |
