goods, which in turn leads to a growing shortage of the means of production used to produce these consumer goods.

In order to better understand why prices rise in periods of prosperity, we should remember that it takes time to build new factories. During the period that a factory is under construction, the capitalists that supply the materials needed to build the factory and the machinery that the factory will contain must be paid. The wages of the construction workers employed in building the factory must also be paid.

Consequently, the demand for both products of Department I, the department of industry that produces the means of production, and Department II, the department of industry that produces the means of consumption, is increased long before the factory and the machinerythe part of capitalists. The capitalists fear that under the paper money system the “monetary authorities” will attempt to combat the crisis by rapidly expanding the supply of the token money they create. The capitalists therefore protect themselves from the resulting depreciation of token money by increasing their holdings of metallic money—gold. The resulting depreciation of the paper money against gold leads to a rise in the purchasing power of gold. Or what comes to exactly the same thing causes a major fall in the prices of commodities in terms of gold.

The 1970s crises caused the rate of profit in the gold mining and refining industries to soar leading to a major rise in investment in gold production. This resulted in a substantial rise in gold production between