Over at Grasping Reality: Trying to Make Sense of the Insane Policy of the Bank of France in the 1920s
Over at Grasping Reality: : Today’s Economic History: Trying to Make Sense of the Insane Policy of the Bank of France in the 1920s: “I have occasionally referred to the insane Bank of France…
…or to the insane policy of the Bank of France, a mental disorder that helped cause the deflation that produced the Great Depression. The insane policy began in 1928 when the Bank of France began converting its rapidly growing stockpile of foreign-exchange reserves (i.e., dollar- or sterling-denominated financial instruments) into gold. The conversion of foreign exchange was precipitated by the enactment of a law restoring the legal convertibility of the franc into gold and requiring the Bank of France to hold gold reserves equal to at least 35% of its outstanding banknotes…