In Box

The Depression? J'accuse!

Is France to blame for the Great Depression?

In trying to explain the Great Depression, economists from Milton Friedman to Ben Bernanke have traditionally focused on the roles of U.S. monetary policy and the gold standard.

According to their version, when the Federal Reserve raised interest rates in 1928, it triggered a massive influx of gold into the United States. Rather than monetizing that gold, the Fed essentially sat on it, forcing prices around the world to fall.

But what many overlook, according to economist Douglas Irwin of Dartmouth College, is that France was doing the same thing -- and to a far greater degree. Between 1926 and 1932, France's share of world gold reserves skyrocketed from 7 percent to 27 percent, while the U.S. share actually fell. In the worst years of the Depression, France removed about 11 percent of the world's gold stock from circulation. According to Irwin, this came at the exact moment when gold was most needed to counteract the deflation that plunged the global economy into nearly a decade of depression.

And all this time we've been blaming Wall Street.

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In Box

The AK-47 of the Cell-Phone World

Forget iPhones and Droids: The Nokia 1100 is the most important cell phone on the planet.

The iPhone vs. Android vs. BlackBerry wars may get all the attention in the Western press, but for most of humanity, smart phones are an impractical luxury. Thanks largely to exploding cell-phone markets in Africa and South Asia, the world's most popular phone -- by far -- is the humble Nokia 1100. Introduced in 2003, an eternity ago in tech years, the 1100 doesn't do much more than make calls and text, and it's not particularly attractive -- but don't tell that to its more than 250 million users. Until networks in the developing world can handle the bandwidth requirements of smart phones, the Nokia 1100 will remain the telecommunications version of the AK-47 -- humanity's most rugged, efficient calling machine.

 

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