Less Economic and Financial Market Volatilty With the Fed than Without

[Toro]

I have no idea if the Great Fiat Monetary Experiment ends well or not. But what we do know is that the economy and financial markets have been less volatile under the Federal Reserve system than prior to its creation in 1913.

The table below, taking from a presentation Professor Reinhart gave last Friday, shows the track record of the nine systemic financial crises the United States has experienced in the last two centuries. It lists total peak-to-trough decline in per-capita gross domestic product following a systemic financial crisis, the time it takes for a country to “snap back” to its precrisis peak and whether there was a double-dip recession, among other data points.

http://economix.blogs.nytimes.com/2014/01/07/200-years-of-american-financial-crises/?_r=2

 

[TakeAStepBack]

Correlation does not imply causation

 

[iamwhatiseem]

Correlation does not imply causation

That is exactly what I was going to say.

 

[expat_panama]

...the economy and financial markets have been less volatile under the Federal Reserve system than prior to its creation in 1913...

Correlation does not imply causation

That is exactly what I was going to say.

--but then correlation proves causation if we're talking about the fact that gold sold for $20 in 1913 and $1,700 a century later? How about we just say there's no harm done, we're better off, and there's good reasons to think going back to 1913 would make things worse.

 

[Bombur]

The Federal Reserve is not perfect but the ability to impact the money supply is one of the most powerful tools our economy has to maintain long term growth. If you are looking for causation then start with Milton Friedman's work concerning money supply.

 

[TakeAStepBack]

Correlation does not imply causation

That is exactly what I was going to say.

--but then correlation proves causation if we're talking about the fact that gold sold for $20 in 1913 and $1,700 a century later? How about we just say there's no harm done, we're better off, and there's good reasons to think going back to 1913 would make things worse.

 

[Kimura]

Correlation does not imply causation

The gold standard was a failure, unless you consider banking panics and recessions/depressions every decade a resounding success.

The FED has largely done a decent job, except for the Great Depression, which was a result of the gold standard.

 

[TakeAStepBack]

Where the fuck did you learn economic history?

 

[TakeAStepBack]

Correlation does not imply causation

The gold standard was a failure, unless you consider banking panics and recessions/depressions every decade a resounding success.

The FED has largely done a decent job, except for the Great Depression, which was a result of the gold standard.

And again, Correlation does not imply causation.

But this seems to be the MO around here regarding economics and history.

 

[TakeAStepBack]

banking panics and recessions/depressions every decade a resounding success

Since we're doing logical fallacies, every decade beats the every 7 years mark under the FR.

 

[Kimura]

Correlation does not imply causation

The gold standard was a failure, unless you consider banking panics and recessions/depressions every decade a resounding success.

The FED has largely done a decent job, except for the Great Depression, which was a result of the gold standard.

And again, Correlation does not imply causation.

But this seems to be the MO around here regarding economics and history.

Indeed it doesn't. I'm not the one that spouts ahistorical nonsense, though.

 

[TakeAStepBack]

I'm not the one that spouts ahistorical nonsense,

The gold standard was a failure, unless you consider banking panics and recessions/depressions every decade a resounding success.

Clearly, you're either ignorant or a liar.

 

[Kimura]

Where the fuck did you learn economic history?

Bocconi University, class of '99. I realize it's not as prestigious or academically rigorous as mises.org


I can save you the tuition costs with a library card and twenty bucks in late fees.

 

[TakeAStepBack]

And yet you stil put forth logical fallacies and historical inaccuracies on the subject like it's your job. You might want to take a few refresher courses. I'd choose a better school too. Or perhaps you're just a bit slower than others.

 

[Kimura]

And yet you stil put forth logical fallacies and historical inaccuracies on the subject like it's your job. You might want to take a few refresher courses. I'd choose a better school too. Or perhaps you're just a bit slower than others.

Logical fallacies? Historical inaccuracies?

A) The Panic of 1819
B) The Panic of 1825
C) The Panic of 1837
D) The Panic of 1847
E) The Panic of 1857
F) The Panic of 1866
G) The Panic of 1873
H) The Panic of 1884
I) The Panic of 1890
J) The Panic of 1893
K) The Panic of 1907
L) The Great Depression

All of the panics of the 19th century were under the gold standard which were promptly followed by corresponding recessions and/or depressions.

Wait....correlation does not imply causation.

 

[Bombur]

Wait, are people here actually arguing for a return to the gold standard?

 

[Kimura]

Wait, are people here actually arguing for a return to the gold standard?

Apparently. It's obviously more stable than fiat. < ------sarcasm.

 

[expat_panama]

Wait, are people here actually arguing for a return to the gold standard?

Really they are --we get it all the time on these threads. Like Kimura was saying they actually try to argue that prices were more stable with gold!

 

[TakeAStepBack]

And yet you stil put forth logical fallacies and historical inaccuracies on the subject like it's your job. You might want to take a few refresher courses. I'd choose a better school too. Or perhaps you're just a bit slower than others.

Logical fallacies? Historical inaccuracies?

A) The Panic of 1819
B) The Panic of 1825
C) The Panic of 1837
D) The Panic of 1847
E) The Panic of 1857
F) The Panic of 1866
G) The Panic of 1873
H) The Panic of 1884
I) The Panic of 1890
J) The Panic of 1893
K) The Panic of 1907
L) The Great Depression

All of the panics of the 19th century were under the gold standard which were promptly followed by corresponding recessions and/or depressions.

Wait....correlation does not imply causation.

1) You suck at history.
2) You suck at economics
3) Clearly you do not know what a gold standard is
4) All of those panics were the result of government meddling in monetary affairs.


Seriously. You fucking suck at history and eonomics, dude. Try again. Use real history. Understand the gold standard. Understand when it took place in the US. Understand that correlation does not imply causation.


Or, entertain me with you ignorance.
Either one is fine by me.

 

[Bombur]

Correlation doesn't mean causation but we do know what the cause is. We know that a static money supply makes the economic cycle more destructive.