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<p>[QUOTE=&quot;harrync, post: 2151099, member: 58588&quot;]Money supply needs to keep pace with economic growth or we have problems - too much money supply growth, inflation; too little, deflation and probable recession.&nbsp; One reason for the panics of the late 1800&#039;s probably was failure of the gold supply to keep up with growth. Even Milton Friedman speculated that perhaps we should have gone to silver instead of gold [in 1873] because its supply grew faster and more in line with the economy than gold. See his Monetary History of the US, Chap 3, footnote 52.&nbsp; Expanding bank deposits made up for most of the shortfall, but 1929 etc. showed that that wasn&#039;t necessarily a good solution. Central bank fiat money seems to work fairly well; problems are almost always due to an external shock - such as the extortionate reparations imposed on Germany in the 1920&#039;s.[/QUOTE]</p><p><br /></p>

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