They remained pegged to Gold. What got them out of it was a te valuation of the dollar with respect to gold.
Discussion
Oh, because we’re printing money we can stay ahead of it for longer as we couldn’t have done with the gold peg
Exactly. The governments and banks were tied to not being able to spend more then they had, as the dollar was redeemable for gold, that meant, there was an inability to provide liquidity in a range of different areas. In the 20’s they had solidified the monopoly of the Federal Reserve and allowed for a lot of individuals to take out credit, but stocks on leverage e.g. 10x.
That created a highly leveraged market until it got to a stage that was unsustainable, The fed increased interest rates to rein in the crazy valuations and chaos ensued. The 30s was the unwinding of that leverage, which was gruesome.
Yes, thank you You explained that very well appreciate that it makes it make so much more sense.