August 30, 2012, 8:57 pm
In arguing for the gold standard and against Matt O’Brien, James Rickards claims “The reason we didn’t [have a swift recovery] in 1929 is policy uncertainty and Roosevelt changing his mind,” to which O’Brien rightly points out that Roosevelt was not President in 1929, and that as soon as he took office, recovery began. Rickards’s reply is, “Roosevelt did nothing to get us out of the Great Depression.”
Now, it is obviously false that Roosevelt-inspired uncertainty had anything to do with the decline from 1929 onward, though perhaps that’s just Rickards making a mistake. The further claim betrays an underlying animus toward Roosevelt, informed by false beliefs about the Great Depression, and supports my off-the-cuff thought about gold-standard advocacy here.
Asking why there was a slow recovery after Roosevelt took office is like Newton asking why apples, once detached from the tree,…
August 27, 2012, 9:11 pm
Paul Krugman lays out the case that a gold standard would cause deflation. He bothers with this because apparently the GOP is seriously considering a return to the gold standard. Deflation, as you’ve read on this blog, is a bad idea; much worse than inflation. So why on earth is deflation so hot with the GOP set, whose core constituencies are the same as the Bryanites of the 1890s who opposed the gold standard as the instrument of those who crucified Our Lord?
The only answer I can come to is that the argument must be, FDR took us off the gold standard; everything FDR did (except fighting Nazis) is evil; therefore we should go back on the gold standard.
This is of course a lousy basis for making policy.
Anyway it’s either that or the GOP are in thrall to the rentier class.
August 25, 2012, 12:57 am
Perhaps Paul Ryan is a gigantic fraud, or perhaps it is everyone who claims to see wisdom in him; perhaps – we should admit a range of possibilities, as our political and pundit class contains many and various mountebanks – both. But if ever there were an undeserved reputation for economic seriousness, it is Ryan’s. Consider the Congressman’s views on the dollar, to which Paul Krugman has recently called attention. Ryan observes that “There is nothing more insidious that a country can do to its citizens than debase its currency.”
Let us pause first, if only briefly, to consider Ryan’s absolutism on this point: Nothing more insidious? Really? Not, perhaps, eroding civil liberties until the President can, at will, assassinate an American citizen?
But no: let’s not permit what might perhaps have been forgivable hyperbole to deter us from investigating the point at issue. Perhaps Ryan …
March 21, 2012, 8:11 am
Stepping on one of my co-bloggers’ toes (that is, I am stepping on his toes, and he is one of my co-bloggers, not that I am stepping on only one of his toes).
Let’s try that again.
I’m sure Eric will comment about this at some point, but I thought I would note that Ben Bernanke, or Professor Bernanke to you students, spoke on the gold standard in his class at George Washington University the other day:
Mr. Bernanke spoke Tuesday about the history of monetary policy in the United States, including the Fed’s creation in 1913, and its role in causing the Great Depression. He framed much of this history as a critique of the gold standard, which was dropped in the early 1930s in a decision that mainstream economists regard as obviously correct, hugely beneficial and essentially irreversible.
The students in the class did not, perhaps, cover themselves in glory commenting to the Times:…
February 9, 2012, 8:55 am
In a WSJ op-ed called “Forty Years of Paper Money,” Detlev Schlichter, a supporter of the gold standard, begins thus:
Forty years ago today, U.S. President Richard Nixon closed the gold window and ushered in, for the first time in human history, a global system of unconstrained paper money under full control of the state.
Now, with that title, that lede, and Schlichter’s very stern opinions about paper money, you’d think that the paper money era began right then, forty years ago. But as Schlichter himself says in his very next sentence,
It is not that prior to August 15, 1971, there was a gold standard. Far from it. Most countries had severed any direct link between their currencies and gold many years earlier.
Right. So the shift to a paper money system didn’t begin with Nixon. And the monetary thing that existed before Nixon’s intervention – the monetary thing that was not, per…