The below is a direct excerpt of Marty's Bent Issue #1122: "They haven't been teaching monetary history accurately." Sign up for the newsletter here.
If you have ever had the displeasure of learning economics while in university or simply have had a pompous sheep fiatsplain to you why a sound money standard can never work you've likely had a professor or the fiatsplainer blame the gold standard for the Great Depression. They'll drop the Great Depression line and then scoff at you as if it you are an imbecile for not realizing this. Well, as our friend natural money points out, this couldn't be further from the truth.
Leading up to the 1930s many countries racked up an insane amount of debt as they engulfed themselves in World War I and attempted to fix the world by enabling a massive credit boom in the 1920s that led to a massive misallocation of capital throughout the global economy. When markets violently crashed and masses of people lost their jobs, those in power pointed to gold and its relatively inelastic supply as the culprit of the economic collapse. Completely disregarding the two decades worth of debt the world binged in leading up to the collapse. Despite the fact that the gold standard was not the impetus for the Great Depression, it has been used as a patsy for almost a century in academic circle jerks led by dishonest Keynesians.
What's worse, the gaslighting doesn't stop there as Habemus Bitcoin points out, capitalism gets blamed for the ills caused by monetary socialism in the form of unfettered credit expansion that leads to an economy with impure and imprecise pricing measurements that eventually causes market collapses. Capitalism is what many blame for the Great Financial Crisis of 2008 and the uneven economic recovery that followed. When in reality the conditions that led to the crash of 2008 were the massive credit expansion that allowed individuals who had no business receiving mortgages getting them with incredible ease. The recovery was uneven because the government and the Fed printed trillions of dollars and handed them off to primary dealers who had privileged access to the Fed window, which exacerbated the Cantillon effect and created a gaping cavern between the wealthy asset owners and the middle/working class.
Systems with bad incentives led to these economic catastrophes. These bad incentives led to massive misallocations of capital that led to inevitable downside volatility as the systems collapsed in on themselves. Bitcoin is here to bring pure and precise measurements and more conservative credit markets back to the economy and it can't happen soon enough.
The next time some fart sniffer tries to tell you that the gold standard was the reason for the Great Depression, politely tell them that they are wrong.