Monetary History of the United States
"And the Reserve System, established in response to monetary instability, had the power to exercise deliberate control over the stock of money and so could take advantage of this possibility to promote monetary stability. That conjecture is not in accord with what actually happened. As is clear to the naked eye in Chart 1, the stock of money shows larger fluctuations after 1914 than before 1914 and this is true even if the large wartime increases in the stock of money are excluded. The blind, undesigned, and quasi-automatic working of the gold Standard turned out to produce a greater…
I recommend you read "Monetary History of the United States" by Friedman. I have. We've had stock market crashes before and after. None resulted in a Great Depression. Something else was going on to cause the Depression. The 100% inflation from 1914-1929 indeed was not prevented by the gold standard, but in 1929 people realized they could double their money by converting their dollars to gold. This caused the bank runs which did not stop until all gold exchanges were stopped. The gold standard ended in 1933, the Depression did not begin to end until 1939 when foreign countries flooded the…
For economics, I prefer history to academic theory. (But I have read Friedman's "Monetary History of the United States", and books by economist C. Northcote Parkinson, "Capitalism" by Reisman, etc. My dad also had a degree in economics from MIT and an MBA from Harvard and a doctorate in economicis and taught finance in college. We had many many long talks about economics. And yeah, I did take econ 101 at Caltech from a Marxist professor. My dad would have had him for lunch.) > wealth absolutely concentrates in unregulated markets The US had more or less unregulated markets for well over a…
> This is just absurd. Not only is this a period so different than a modern economy that it's not useful for comparison, I hear that a lot. Nobody is ever able to explain what law of economics changed in 1914. The Law of Supply & Demand was just the same as it always was. > but during that period it was a roller coaster of inflation and deflation, both of which are terrible for people. Those curious can see the volatility here: https://commons.wikimedia.org/wiki/File:US_Historical_Inflat... All of the spikes were the result of the US government meddling with the economy (such as bimetalism…
> the fact that our most stable period of low inflation was under fiat money. And that wasn't just true here. Central banks with well-managed money supplies brought price stability to many countries. Milton Friedman in "Monetary History of the United States" shows with graphs and charts that the instability was higher under the stabilizing hand of the Fed. What the Fed brought was an upward bias to it. > I understand that goldbuggery is a religion All I'm pointing out is the true cause of inflation. The voodoo is all the other theories trying to deny what it is. As for stability, is that…
I did not deny the dust bowl. Think about what low crop prices means. It means FOOD IS CHEAP. That's utterly inconsistent with famine. And Roosevelt destroying zillions of pigs and letting their carcasses rot in ditches is famine? It beggars belief. > It was largely a failure of unrestricted free markets. The dust bowl was caused by unsustainable farming practices, which were changed as a result. The Depression was caused by the Fed (read "Monetary History of the United States" by Milton Friedman. Not a novelist.) > Yes, a novel about the dust bowl and it's consequences. Novels are…
Friedman has a different take on this from "Monetary History of the United States". There was a severe contraction in 1937-38. 1939 saw a huge influx of gold from foreign arms purchases, which finally took the country out of the Depression. See the chart on page 530. 1936 was a false dawn. "It is a measure of the severity of the preceding contraction that, despite such sharp rises, money income was 17 per cent lower in 1937 than at the preceding peak eight years earlier and real income was only 3 per cent higher. Since population had grown nearly 6 per cent in the interim, per capita output…
I'm not appealing to authority (I did not even mention economists who thought this way until YOU chose to make it personal about problem people for America), I am providing examples that the counter argument does not make you stupid, which was a cheap ad hominem attack. Its just a cheap underhanded attack to call people ignorant and stupid and then call it an appeal to authority as soon as an example is presented of someone who beleived same but was not. I am not saying the argument is correct because milton said it (t hat would be appeal to authority), I'm saying he disproves that the view…
Read Friedman and Schwartz' Monetary History of the United States. The Great Depression was so severe because the money supply contracted so suddenly, which led to the largest deflation in US history. Mainstream economists worry about deflation because in the 30s it nearly doomed the entire system. The single largest quarter of growth in US history was the first quarter of FDR's first term, when he stopped the money supply from contracting further with the bank holiday and stopped defending the gold standard. It is amazing to me that we live in an era with tiny amounts of inflation…
> The ability to control boom and bust cycles by messing with the money supply is the whole point. Except they're a failure at it. We have boom and bust cycles anyway. Remember 2000, 2008, 2022? Friedman also demonstrates in "Monetary History of the United States" that the hand of the Fed on the tiller results in less stability of the money supply. The "whole point" of fiat money is to be able to spend money without having to tax it first. That's why the European powers adopted it in WW1 - to finance the war. > I fail to see how that refutes anything? It refutes the notion that the…