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Japan's 1930 Gold Standard Disaster
July 23, 2013
by William P. Meyers

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It sad that in this age we still have to deal with ignorance about the Gold Standard, the evolution of species through natural selection, and the reality that dead people are really dead (at least in the present and future; they are alive at points in the past). I've written about the gold standard most recently in Gold, Black Friday 1869, and the Federal Reserve [March 17, 2012]

While doing research on another topic today I came across yet another example of how badly the gold standard works in the real world. I'll just quote from East Asia, The Modern Transformation by John K. Fairbank et. al. [Houghton Mifflin, 1965, pages 498 and 499]:

"Then, after springing back briefly, the [Japanese] economy experienced an even greater shock in 1930. In January, Inoue Junnosuke, the orthodox-minded finance minister, unwisely put Japan back on the gold standard, just two months after the American crash and at a time when world prices had already started a precipitous descent. The resultant rise in the value of the yen heightened the deflationary impact of world economic conditions, and Japan sank into a serius depression."


Inoue's successor as finance minister, Takahashi Korekiyo (1854-1936) again took Japan off the gold standard in December 1931, and the yen, which had been worth 50 cents, eventually stabilized around 30 cents. Such a severe devaluation produced a boom in exports..." resulting in a recovery of the Japanese economy. " So "Japan was recovering by 1932, and in the next few years her economy forged ahead faster than that of any other nation."

I have little to add, this is just another real-world nail in the coffin of the gold ideologists.

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