you people go on and on don't you , page-20

treefeed - did you know that central banks are actually adding gold to their reserves rather than selling it- are you aware of that?

Lets look at the facts of "The great Depression" to see where GOLD may be headed and the effects of inflation verses deflation
The Great Depression: Statistical Summary

The Dow Jones Industrial Average reached a peak of 381 on September 3, 1929. By July 8, 1932, it had reached its floor of 41, a plunge of 89% in less than 3 years. (This is a historical tidbit that those who think they are ?bottom fishing? at current stock market levels should keep in mind.)

The United States Gross Domestic Product was $103 billion in 1929. By 1933 it had fallen to $56 billion, a decline of 46%.

Accompanying the freefall in both the economy and the markets, price levels were falling as well ? meaning that the value of a dollar was rising rapidly. The Consumer Price Index was at a level of 17.3 in September of 1929, and by March of 1933 had fallen to a level of 12.6. This means that what cost $1.00 in 1929, cost 73 cents (on average) by 1933. This 27% deflation, this fall in the average cost of goods and services, represents a 37% increase in the purchasing power of a dollar.

For some people, the effect of this deflation was to increase both their wealth and their standard of living. These are the people who had substantial money savings, either in physical cash, or fixed denomination financial assets that survived the economic turmoil, such as accounts in banks that did not go bust, or the bonds of companies that did not default. For these individuals, all else being equal, their standards of living rose because they had the same amount of dollars, and each dollar bought more than it had previously.

However, this increase in the value of a dollar was achieved at great cost for most of the nation (and the world). The reason for the increase in value was that dollars had become scarcer for businesses and most individuals. The destruction of the banks and much of the financial markets had dried up access to money on attractive terms. Widespread unemployment meant fewer dollars available to buy goods and services, which drove down the prices, which is what dropped the Consumer Price Index.

Most importantly, the deflation was not independent of the plunge in the markets and economy, and not just a result, but most economists agree that this monetary deflation was actually a reason why the Great Depression got as bad as it did. Because there was not enough money, the source of funding for growing businesses was gone. Because there was not enough money, and the money outstanding had grown too dear, consumers were not spending. Because there wasn?t enough spending, businesses had to lay people off. Which further reduced consumer spending. The nation was caught in a vicious deflationary cycle, which it seemingly could not break out of.


Yet, the United States did break out of the deflationary cycle, as illustrated in the graph above. After rapidly plunging for about 30 months, with the CPI seemingly in free fall and not able to find a floor ? there was an abrupt turnaround. Not only was a floor found, but an immediate cycle of inflation replaced the seemingly unstoppable deflation. The nation turned essentially ?on a dime?, from unstoppable deflation to inflation instead. A cycle of inflation that has continued until this day.