Post
Topic
Board Economics
Re: Would the failure of Bitcoin lead you to reconsider your assumptions?
by
kjj
on 07/06/2011, 23:26:39 UTC
You have two periods during the USA XIX century. One, after Andrew Jackson closed the Second Bank of the USA (the central bank of the USA back then) until the civil war, and then after the depression that the civil war brought until the beggining of the XX century, although during this last period there was the National Banks Act that centralized the credit in the New York banks and allowed for some expansion of credit and some bubbles. But it was very tame compared to what a central bank could do, so there was still price deflation.

I love the part where you leave out that defending the gold standard and it's deflationary nature brought the full wrath of the Great Depression, the single most important economic event that shaped modern macro. Far from being relinquished to the outskirts of the economic science as they are today, "sound money" advocates like yourself were the top dogs in 1929, and the full scale of their incompetence has yet to be equaled.

Nonsense.  The Federal Reserve System was created in 1913, and enabled all of the banks to take fractional reserve lending to the next level by not having to worry about bank runs.  The inflation caused by all this fractional reserve lending meant that the gold standard was effectively dead.

If you have inflation, you do not have a gold standard.  If you have the gold standard, you do not have inflation.  These are definitions, not arguments.

What they did was pretend that they had a gold standard, while they actually inflated the currency.  Another name for this practice is "lying".