The Federal Reserve: Revelations

[Kimura]

But having our currency lose 96% of its value is a good thing

That's extremely misleading.

 

[Kimura]

Yeah you know what the constraints are? You're unable to print as much money as you need out of thin air.

Money and Wealth actually had to be EARNED!

What a concept huh?

It makes one realize how idiotic the gold standard was. The very nature of the gold standard requires a fixed quantity of $$$$. When the US was on a gold standard/fixed f/x, banks could not guarantee funding. The were required to hold enough $$$$ to met depositor needs in the form of reserves (convertible). Banks couldn't properly function with 100% reserves, so the system was based on depositors not going into a panic.

The US went through some catastrophic depressions in the 19th century.The Great Depression more serious than what had occurred in 1907. The FED was tasked with acting lender of last resort, but that didn't materialize as a consequence of the gold standard. The gold standard constrained the FED; they couldn't lend banks the convertible f/x they needed to patch over withdrawal demands. Thousands of banks failed, we needed a bank holiday and reorganization needed to occur.

 

[Toro]

I was a little harsh, since I like PC, so I extended my apologies to her for being obnoxious.

Instead, I will rephrase: That's very, very silly.

 

[Toro]

I second that.

Data por favor?

The St Louis Fed used to have a great site that estimated real GDP capita per year for every year since 1790. Several years ago, I looked at the annual compounded growth through the 1800s compared to the 1900s, and found that the 1900s had higher growth.

I believe that the reason why real total GDP was higher in the 19th century was because immigration and population growth was high. Adjusted for population, GDP actually lagged.

But, I'd happily recant if someone showed me otherwise.

 

[Toro]

Toro knows the Banking crisis of 1907 was fabricated so he's being disingenuous here.

Just Google "Bank Crisis of 1907".

Just highlight the above text and right click, it'll say "Search Google for" and choose "Bank Crisis of 1907".

That even works in my ChromeBook.

1907 was no more fabricated than 2008. It's a bizarre assertion.

 

[Kimura]

I was a little harsh, since I like PC, so I extended my apologies to her for being obnoxious.

Instead, I will rephrase: That's very, very silly.

I was joking, I haven't heard that term in years.

 

[Kimura]

I second that.

Data por favor?

The St Louis Fed used to have a great site that estimated real GDP capita per year for every year since 1790. Several years ago, I looked at the annual compounded growth through the 1800s compared to the 1900s, and found that the 1900s had higher growth.

I believe that the reason why real total GDP was higher in the 19th century was because immigration and population growth was high. Adjusted for population, GDP actually lagged.

But, I'd happily recant if someone showed me otherwise.

Courtesy of Lord Keynes:

US Real Per Capita GDP from 1870–2001

The following is Angus Maddison’s data on real per capita GDP from 1870 to 2001, with my calculations of annual and decadal growth rates. The estimates for the 19th century come from Balke and Gordon (1989), and later data from standard sources:Real US Per Capita GDP 1870–2001

(in 1990 international Geary-Khamis dollars)

Year | GDP | Growth rate
1870 | 2445 |
1871 | 2489 | 1.79%
1872 | 2524 | 1.40%
1873 | 2562 | 1.50%
1874 | 2601 | 1.50%
1875 | 2643 | 1.61%
1876 | 2686 | 1.62%
1877 | 2732 | 1.71%
1878 | 2780 | 1.75%
1879 | 2829 | 1.76%
1880 | 2880 | 1.80%
1881 | 2921 | 1.42%
1882 | 2963 | 1.43%
1883 | 3008 | 1.51%
1884 | 3056 | 1.59%
1885 | 3106 | 1.63%
1886 | 3158 | 1.67%
1887 | 3213 | 1.74%
1888 | 3270 | 1.77%
1889 | 3330 | 1.83%
1890 | 3392 | 1.86%
1891 | 3467 | 2.21%
1892 | 3728 | 7.52%
1893 | 3478 | -6.70%
1894 | 3314 | -4.71%
1895 | 3644 | 9.95%
1896 | 3504 | -3.84%
1897 | 3769 | 7.56%
1898 | 3780 | 0.29%
1899 | 4051 | 7.16%
1900 | 4091 | 0.98%
1901 | 4464 | 9.11%
1902 | 4421 | -0.96%
1903 | 4551 | 2.94%
1904 | 4410 | -3.09%
1905 | 4642 | 5.26%
1906 | 5079 | 9.41%
1907 | 5065 | -0.27%
1908 | 4561 | -9.95%
1909 | 5017 | 9.99%
1910 | 4964 | -1.05%
1911 | 5046 | 1.65%
1912 | 5201 | 3.07%
1913 | 5301 | 1.92%
1914 | 4799 | -9.46%
1915 | 4864 | 1.35%
1916 | 5459 | 12.2%
1917 | 5248 | -3.86%
1918 | 5659 | 7.83%
1919 | 5680 | 0.37%
1920 | 5552 | -2.25%
1921 | 5323 | -4.12%
1922 | 5540 | 4.07%
1923 | 6164 | 11.26%
1924 | 6233 | 1.11%
1925 | 6282 | 0.78%
1926 | 6602 | 5.09%
1927 | 6576 | -0.39%
1928 | 6569 | -0.10%
1929 | 6899 | 5.02%
1930 | 6213 | -9.94%
1931 | 5691 | -8.40%
1932 | 4908 | -13.75%
1933 | 4777 | -2.66%
1934 | 5114 | 7.05%
1935 | 5467 | 6.90%
1936 | 6204 | 13.48%
1937 | 6430 | 3.64%
1938 | 6126 | -4.72%
1939 | 6561 | 7.10%
1940 | 7010 | 6.84%
1941 | 8206 | 17.06%
1942 | 9741 | 18.70%
1943 | 11518 | 18.24%
1944 | 12333 | 7.07%
1945 | 11709 | -5.05%
1946 | 9197 | -21.45%
1947 | 8886 | -3.38%
1948 | 9065 | 2.01%
1949 | 8944 | -1.33%
1950 | 9561 | 6.89%
1951 | 10116 | 5.80%
1952 | 10316 | 1.97%
1953 | 10613 | 2.87%
1954 | 10359 | -2.39%
1955 | 10897 | 5.19%
1956 | 10914 | 0.15%
1957 | 10920 | 0.05%
1958 | 10631 | -2.64%
1959 | 11230 | 5.63%
1960 | 11328 | 0.87%
1961 | 11402 | 0.65%
1962 | 11905 | 4.41%
1963 | 12242 | 2.83%
1964 | 12773 | 4.33%
1965 | 13419 | 5.05%
1966 | 14134 | 5.32%
1967 | 14330 | 1.38%
1968 | 14863 | 3.71%
1969 | 15179 | 2.12%
1970 | 15030 | -0.98%
1971 | 15304 | 1.82%
1972 | 15944 | 4.18%
1973 | 16689 | 4.67%
1974 | 16491 | -1.18%
1975 | 16284 | -1.25%
1976 | 16975 | 4.24%
1977 | 17567 | 3.48%
1978 | 18373 | 4.58%
1979 | 18789 | 2.26%
1980 | 18577 | -1.12%
1981 | 18856 | 1.50%
1982 | 18325 | -2.81%
1983 | 18920 | 3.24%
1984 | 20123 | 6.35%
1985 | 20717 | 2.95%
1986 | 21236 | 2.50%
1987 | 21788 | 2.59%
1988 | 22499 | 3.26%
1989 | 23059 | 2.48%
1990 | 23201 | 0.61%
1991 | 22785 | -1.79%
1992 | 23169 | 1.68%
1993 | 23477 | 1.32%
1994 | 24130 | 2.78%
1995 | 24484 | 1.46%
1996 | 25066 | 2.37%
1997 | 25819 | 3.00%
1998 | 26619 | 3.09%
1999 | 27395 | 2.91%
2000 | 28129 | 2.67%
2001 | 27948 |
(Maddison 2006: 87–89).

Average Decadal Real Per Capita Growth Rates
Average Growth Rate 1871–1880: 1.64%
Average Growth Rate 1881–1890: 1.65%
Average Growth Rate 1891–1900: 2.04%
Average Growth Rate 1901–1910: 2.13%
Average Growth Rate 1911–1920: 1.28%
Average Growth Rate 1921–1930: 1.27%
Average Growth Rate 1931–1940: 1.54%
Average Growth Rate 1941–1950: 3.87%
Average Growth Rate 1951–1960: 1.75%
Average Growth Rate 1961–1970: 2.88%
Average Growth Rate 1971–1980: 2.16%
Average Growth Rate 1981–1990: 2.26%
Average Growth Rate 1991–2000: 1.94%

Special Averages

Average Growth Rate 1871–1900: 1.78%
Average Growth Rate 1871–1914: 1.63%
Average Growth Rate 1873–1879: 1.64%
Average Growth Rate 1879 to 1896: 1.36%
Roaring 20s, Average Growth Rate 1920–1929: 2.04%
Recovery from Depression 1934–1940: 5.75%

Average Growth Rate 1948–1973: 2.30%.We can now rank the various decadal averages from the lowest to highest:

(1) Average Growth Rate 1921–1930: 1.27%
(2) Average Growth Rate 1911–1920: 1.28%
(3) Average Growth Rate 1931–1940: 1.54%
(4) Average Growth Rate 1871–1880: 1.64%
(5) Average Growth Rate 1881–1890: 1.65%
(6) Average Growth Rate 1951–1960: 1.75%
(7) Average Growth Rate 1991–2000: 1.94%
(8) Average Growth Rate 1891–1900: 2.04%
(9) Average Growth Rate 1901–1910: 2.13%
(10) Average Growth Rate 1971–1980: 2.16%
(11) Average Growth Rate 1981–1990: 2.26%
(12) Average Growth Rate 1961–1970: 2.88%
(13) Average Growth Rate 1941–1950: 3.87%.

If we remove those decades where the average decade real per capita GDP growth rates were distorted by wars (1910s and 1940s), we obtain this list:

(1) Average Growth Rate 1921–1930: 1.27%
(2) Average Growth Rate 1931–1940: 1.54%
(3) Average Growth Rate 1871–1880: 1.64%
(4) Average Growth Rate 1881–1890: 1.65%
(5) Average Growth Rate 1951–1960: 1.75%
(6) Average Growth Rate 1991–2000: 1.94%
(7) Average Growth Rate 1891–1900: 2.04%
(8) Average Growth Rate 1901–1910: 2.13%
(9) Average Growth Rate 1971–1980: 2.16%
(10) Average Growth Rate 1981–1990: 2.26%
(11) Average Growth Rate 1961–1970: 2.88%.

Some observations:

(1) the 1870s stands out as the third worst peacetime decade of all time. Only those decades affected by the Great Depression (1920s and 1930s) were worse.

(2) The 1960s, the era when Keynesian macroeconomic management of the US economy was at its height, stands out as the best decade.

(3) The 1980s was the second best decade. But then Reagan’s economic policy was merely Keynesian after 1982, so this is not that big a surprise.

(4) Even the 1970s – the era of the oil shocks and stagflation crisis – had a respectable real per capita GDP growth rate of 2.16%, and was the third highest rate.

(5) If one defines the roaring ’20s as the 1920–1929, its average growth rate was 2.04%

(6) The average real per capita GDP growth rate from 1871–1914 during the gold standard era was 1.63%. The era of classic US Keynesianism (1948–1973) had a rate of 2.30%. The latter period emerges as the clear winner.

BIBLIOGRAPHY
Balke, N. S., and R. J. Gordon, 1989. “The Estimation of Prewar Gross National Product: Methodology and New Evidence,”Journal of Political Economy 97.1: 38–92.

Maddison, Angus. 2003. The World Economy: Historical Statistics. OECD Publishing, Paris.

Social Democracy for the 21st Century A Post Keynesian Perspective US Real Per Capita GDP from 1870 8211 2001​

 

[Andylusion]

I second that.

Data por favor?

The St Louis Fed used to have a great site that estimated real GDP capita per year for every year since 1790. Several years ago, I looked at the annual compounded growth through the 1800s compared to the 1900s, and found that the 1900s had higher growth.

I believe that the reason why real total GDP was higher in the 19th century was because immigration and population growth was high. Adjusted for population, GDP actually lagged.

But, I'd happily recant if someone showed me otherwise.

Courtesy of Lord Keynes:

US Real Per Capita GDP from 1870–2001

The following is Angus Maddison’s data on real per capita GDP from 1870 to 2001, with my calculations of annual and decadal growth rates. The estimates for the 19th century come from Balke and Gordon (1989), and later data from standard sources:Real US Per Capita GDP 1870–2001

(in 1990 international Geary-Khamis dollars)

Year | GDP | Growth rate
1870 | 2445 |
1871 | 2489 | 1.79%
1872 | 2524 | 1.40%
1873 | 2562 | 1.50%
1874 | 2601 | 1.50%
1875 | 2643 | 1.61%
1876 | 2686 | 1.62%
1877 | 2732 | 1.71%
1878 | 2780 | 1.75%
1879 | 2829 | 1.76%
1880 | 2880 | 1.80%
1881 | 2921 | 1.42%
1882 | 2963 | 1.43%
1883 | 3008 | 1.51%
1884 | 3056 | 1.59%
1885 | 3106 | 1.63%
1886 | 3158 | 1.67%
1887 | 3213 | 1.74%
1888 | 3270 | 1.77%
1889 | 3330 | 1.83%
1890 | 3392 | 1.86%
1891 | 3467 | 2.21%
1892 | 3728 | 7.52%
1893 | 3478 | -6.70%
1894 | 3314 | -4.71%
1895 | 3644 | 9.95%
1896 | 3504 | -3.84%
1897 | 3769 | 7.56%
1898 | 3780 | 0.29%
1899 | 4051 | 7.16%
1900 | 4091 | 0.98%
1901 | 4464 | 9.11%
1902 | 4421 | -0.96%
1903 | 4551 | 2.94%
1904 | 4410 | -3.09%
1905 | 4642 | 5.26%
1906 | 5079 | 9.41%
1907 | 5065 | -0.27%
1908 | 4561 | -9.95%
1909 | 5017 | 9.99%
1910 | 4964 | -1.05%
1911 | 5046 | 1.65%
1912 | 5201 | 3.07%
1913 | 5301 | 1.92%
1914 | 4799 | -9.46%
1915 | 4864 | 1.35%
1916 | 5459 | 12.2%
1917 | 5248 | -3.86%
1918 | 5659 | 7.83%
1919 | 5680 | 0.37%
1920 | 5552 | -2.25%
1921 | 5323 | -4.12%
1922 | 5540 | 4.07%
1923 | 6164 | 11.26%
1924 | 6233 | 1.11%
1925 | 6282 | 0.78%
1926 | 6602 | 5.09%
1927 | 6576 | -0.39%
1928 | 6569 | -0.10%
1929 | 6899 | 5.02%
1930 | 6213 | -9.94%
1931 | 5691 | -8.40%
1932 | 4908 | -13.75%
1933 | 4777 | -2.66%
1934 | 5114 | 7.05%
1935 | 5467 | 6.90%
1936 | 6204 | 13.48%
1937 | 6430 | 3.64%
1938 | 6126 | -4.72%
1939 | 6561 | 7.10%
1940 | 7010 | 6.84%
1941 | 8206 | 17.06%
1942 | 9741 | 18.70%
1943 | 11518 | 18.24%
1944 | 12333 | 7.07%
1945 | 11709 | -5.05%
1946 | 9197 | -21.45%
1947 | 8886 | -3.38%
1948 | 9065 | 2.01%
1949 | 8944 | -1.33%
1950 | 9561 | 6.89%
1951 | 10116 | 5.80%
1952 | 10316 | 1.97%
1953 | 10613 | 2.87%
1954 | 10359 | -2.39%
1955 | 10897 | 5.19%
1956 | 10914 | 0.15%
1957 | 10920 | 0.05%
1958 | 10631 | -2.64%
1959 | 11230 | 5.63%
1960 | 11328 | 0.87%
1961 | 11402 | 0.65%
1962 | 11905 | 4.41%
1963 | 12242 | 2.83%
1964 | 12773 | 4.33%
1965 | 13419 | 5.05%
1966 | 14134 | 5.32%
1967 | 14330 | 1.38%
1968 | 14863 | 3.71%
1969 | 15179 | 2.12%
1970 | 15030 | -0.98%
1971 | 15304 | 1.82%
1972 | 15944 | 4.18%
1973 | 16689 | 4.67%
1974 | 16491 | -1.18%
1975 | 16284 | -1.25%
1976 | 16975 | 4.24%
1977 | 17567 | 3.48%
1978 | 18373 | 4.58%
1979 | 18789 | 2.26%
1980 | 18577 | -1.12%
1981 | 18856 | 1.50%
1982 | 18325 | -2.81%
1983 | 18920 | 3.24%
1984 | 20123 | 6.35%
1985 | 20717 | 2.95%
1986 | 21236 | 2.50%
1987 | 21788 | 2.59%
1988 | 22499 | 3.26%
1989 | 23059 | 2.48%
1990 | 23201 | 0.61%
1991 | 22785 | -1.79%
1992 | 23169 | 1.68%
1993 | 23477 | 1.32%
1994 | 24130 | 2.78%
1995 | 24484 | 1.46%
1996 | 25066 | 2.37%
1997 | 25819 | 3.00%
1998 | 26619 | 3.09%
1999 | 27395 | 2.91%
2000 | 28129 | 2.67%
2001 | 27948 |
(Maddison 2006: 87–89).

Average Decadal Real Per Capita Growth Rates
Average Growth Rate 1871–1880: 1.64%
Average Growth Rate 1881–1890: 1.65%
Average Growth Rate 1891–1900: 2.04%
Average Growth Rate 1901–1910: 2.13%
Average Growth Rate 1911–1920: 1.28%
Average Growth Rate 1921–1930: 1.27%
Average Growth Rate 1931–1940: 1.54%
Average Growth Rate 1941–1950: 3.87%
Average Growth Rate 1951–1960: 1.75%
Average Growth Rate 1961–1970: 2.88%
Average Growth Rate 1971–1980: 2.16%
Average Growth Rate 1981–1990: 2.26%
Average Growth Rate 1991–2000: 1.94%

Special Averages

Average Growth Rate 1871–1900: 1.78%
Average Growth Rate 1871–1914: 1.63%
Average Growth Rate 1873–1879: 1.64%
Average Growth Rate 1879 to 1896: 1.36%
Roaring 20s, Average Growth Rate 1920–1929: 2.04%
Recovery from Depression 1934–1940: 5.75%

Average Growth Rate 1948–1973: 2.30%.We can now rank the various decadal averages from the lowest to highest:

(1) Average Growth Rate 1921–1930: 1.27%
(2) Average Growth Rate 1911–1920: 1.28%
(3) Average Growth Rate 1931–1940: 1.54%
(4) Average Growth Rate 1871–1880: 1.64%
(5) Average Growth Rate 1881–1890: 1.65%
(6) Average Growth Rate 1951–1960: 1.75%
(7) Average Growth Rate 1991–2000: 1.94%
(8) Average Growth Rate 1891–1900: 2.04%
(9) Average Growth Rate 1901–1910: 2.13%
(10) Average Growth Rate 1971–1980: 2.16%
(11) Average Growth Rate 1981–1990: 2.26%
(12) Average Growth Rate 1961–1970: 2.88%
(13) Average Growth Rate 1941–1950: 3.87%.

If we remove those decades where the average decade real per capita GDP growth rates were distorted by wars (1910s and 1940s), we obtain this list:

(1) Average Growth Rate 1921–1930: 1.27%
(2) Average Growth Rate 1931–1940: 1.54%
(3) Average Growth Rate 1871–1880: 1.64%
(4) Average Growth Rate 1881–1890: 1.65%
(5) Average Growth Rate 1951–1960: 1.75%
(6) Average Growth Rate 1991–2000: 1.94%
(7) Average Growth Rate 1891–1900: 2.04%
(8) Average Growth Rate 1901–1910: 2.13%
(9) Average Growth Rate 1971–1980: 2.16%
(10) Average Growth Rate 1981–1990: 2.26%
(11) Average Growth Rate 1961–1970: 2.88%.

Some observations:

(1) the 1870s stands out as the third worst peacetime decade of all time. Only those decades affected by the Great Depression (1920s and 1930s) were worse.

(2) The 1960s, the era when Keynesian macroeconomic management of the US economy was at its height, stands out as the best decade.

(3) The 1980s was the second best decade. But then Reagan’s economic policy was merely Keynesian after 1982, so this is not that big a surprise.

(4) Even the 1970s – the era of the oil shocks and stagflation crisis – had a respectable real per capita GDP growth rate of 2.16%, and was the third highest rate.

(5) If one defines the roaring ’20s as the 1920–1929, its average growth rate was 2.04%

(6) The average real per capita GDP growth rate from 1871–1914 during the gold standard era was 1.63%. The era of classic US Keynesianism (1948–1973) had a rate of 2.30%. The latter period emerges as the clear winner.

BIBLIOGRAPHY
Balke, N. S., and R. J. Gordon, 1989. “The Estimation of Prewar Gross National Product: Methodology and New Evidence,”Journal of Political Economy 97.1: 38–92.

Maddison, Angus. 2003. The World Economy: Historical Statistics. OECD Publishing, Paris.

Social Democracy for the 21st Century A Post Keynesian Perspective US Real Per Capita GDP from 1870 8211 2001​

Arnold says AURGH....

This is what aggravates me about cheery picking numbers and such, and arbitrary time frames.

Economic policies do not fit into neat little 10-year windows.

Look at some of the things claimed here. If you define the 'roaring 20s' as 1920 to 1929........ who the hell defines the roaring 20s as starting in 1920? 1920, was the worst recession in US history. GDP dropped by 15% or more in ONE YEAR. Worse than any 1 year drop during the entire depression.

1921, had a near ZERO GDP growth. The roaring twenties started in 1922. And why would you count 1929? 1929 was the start of the Great Depression.

The economic policies instituted by Coolidge that resulted in the "roaring 20s" was enacted during 1921. And the replacement economic policies started in 1929.

If you want to gauge the effectiveness of any given economic policy, you need to go from where it starts, to where it ends. Not "1920 to 1929". Polices are not neat 10 year windows. You should gauge from the Roaring 20s, from 1921 to 1928.

But of course that would result in really high growth rate numbers, which would make free-market Capitalist policies look good, and so, we're going to include years before those policies were enacted, and years after they were replaced.

Just like looking at the Reagan policies, and picking 1980, to 1989. But the economic policies were not fully enacted until 1983. But of course we can't look at GDP growth from the time the policy was implemented. No, instead we have to look at GDP Growth from the moment Reagan takes office, as if the policies were magically implemented as soon as Reagan raised his hand.

Why? Because if we actually look at the GDP growth from the time the policies were in effect, that would make free-market capitalism look good. So instead, we just grab " the 1980s " as if that was logical.

I also like how magically, after 1982, Reagans policies were 'Keynesian' but before, they were magically not Keynesian.

Unbelievable.

The entire book is garbage. What a waste of effort.

 

[Toro]

This is an amazing graph. It goes back to 1870 and ends in 2006. If it included after 2006, it would show a slight deviation down then up on the same trajectory.

 

[EdwardBaiamonte]

The gold standard constrained the FED; they couldn't lend banks the convertible f/x they needed to patch over withdrawal demands. Thousands of banks failed, we needed a bank holiday and reorganization needed to occur.

Total lying 100% BS of course. According to the Gold Standard rules in place at the time they should have lent money to the banks but simple failed to do it because they did not understand the consequences. When Friedman and Bernanke discovered the consequences liquidity was never a problem again. In fact, nowadays you hear far more about potential doom from too much liquidity rather than too little. Not surprised that self-described conservative/liberal gets all matters of consequence backwards.

 

[EdwardBaiamonte]

This is an amazing graph. It goes back to 1870 and ends in 2006. If it included after 2006, it would show a slight deviation down then up on the same trajectory.

 

[EdwardBaiamonte]

This is an amazing graph. It goes back to 1870 and ends in 2006. If it included after 2006, it would show a slight deviation down then up on the same trajectory.

so whats the conclusion? Despite liberal govt interference capitalists continue to invent new things and the economy always grows? Or, growth would have been 4% without all the turmoil caused by liberal intervention.

 

[Andylusion]

This is an amazing graph. It goes back to 1870 and ends in 2006. If it included after 2006, it would show a slight deviation down then up on the same trajectory.

so whats the conclusion? Despite liberal govt interference capitalists continue to invent new things and the economy always grows? Or, growth would have been 4% without all the turmoil caused by liberal intervention.

First.... notice the scale at the bottom. They changed the scale. Do you see?

From the 1870 to 1970, its increase in 20 year incriments steadily. Then from 1970, it jumps to 2000, and they double the slide on the graph.... making it LOOK as though the scale is the same. But it's not. Remember: "There are lies, damned lies, and statistics" - Mark Twain.

With a uniform scale at the bottom, you can see that per capita GDP, grew faster after the JFK tax cuts in the 1960s, and faster still after the Reagan tax cuts in the early 80s.

That said... clearly there hasn't been a massive difference. Some difference, but not huge.

Why? Well, it's likely because as much as we make a big deal of the 70% to 90% upper tax brackets, the truth is, if you look at Federal Tax Reciepts, as a percent of GDP, it hasn't been 20% but twice since 1945, the first time being 1945, and the second being 2001.

In other words, with a top marginal tax rate of 90% in 1945, the government only collected 20% of GDP in tax. With the top marginal rate at 33% in 2001, it collected 20% of GDP in tax revenue, and that was a recession year.

Point is... while taxes do have a fairly sizable short term effect, in the long term, people adjust how they live, to avoid taxes. When the tax rate was increased to 91% in 1950, the tax revenue as a percent of GDP, fell almost every single year until 1960.

The money that would have been sucked out of the economy by bad tax policy, was put into tax havens, was hidden, or taken in non-taxable compensation, or given to charity.

So the drastically bad effects, were mitigated by individuals choosing to hide their income from taxes.

I would suggest to you, that if the government ever put in place a tax system, without any deductions or methods for reducing tax bills, or tax avoidance... the result would be havoc. I truly believe that.

So while I'm still against tax hikes, for their short term negative effects, as long as there are ways to mitigate the taxes, there should not be a long term catastrophic damage. If the government actually eliminates those mitigating policies, and then hikes taxes, We're in deep trouble then.

 

[EdwardBaiamonte]

I would suggest to you, that if the government ever put in place a tax system, without any deductions or methods for reducing tax bills, or tax avoidance... the result would be havoc. I truly believe that.

I suppose though it would depend on what the rate would be if they eliminated deductions. I assume they would be scared to death to eliminate deductions and would have a rock bottom rate. However, I think the real issue is the pace of innovation which seems to stay constant, at least within a broad range of liberal interference. Japan for example has had 25 years of GDP stagnation but still everyone can afford all the latest computer related gadgets and accordingly a much higher standard of living.

 

[Toro]

First.... notice the scale at the bottom. They changed the scale. Do you see?

From the 1870 to 1970, its increase in 20 year incriments steadily. Then from 1970, it jumps to 2000, and they double the slide on the graph.... making it LOOK as though the scale is the same. But it's not. Remember: "There are lies, damned lies, and statistics" - Mark Twain.

The graph I posted was a logarithmic, which scales rate of change. Yours is linear and thus distorts the rate of change, making later changes relative to earlier changes look bigger than they really are.

For example, in your graph 1 to 2 is a 100% change but looks smaller than 100 to 150, even though the growth is slower in the latter.

 

[Toro]

so whats the conclusion? Despite liberal govt interference capitalists continue to invent new things and the economy always grows? Or, growth would have been 4% without all the turmoil caused by liberal intervention.

The conclusions are twofold. First, it is a remarkable testament to the spirit and ingenuity of the American people. Second, policy hasn't mattered a whole lot. Regardless of whether taxes or spending went up or down, for the most part, the economy has grown at about the same rate.

 

[PoliticalChic]

There are many who have a somewhat....pejorative... view of the Federal Reserve, some of which includes the following.


1. "From 1836 until 1913, when the Federal Reserve Act was snuck through Congress, the United States did not have a central bank. It is no coincidence that this period of time marked the greatest real economic growth in the history of our nation.

Can you back this claim up?

Thanks.

"It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913. The following information comes from Wikipedia...

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled."
During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve

 

[Toro]

There are many who have a somewhat....pejorative... view of the Federal Reserve, some of which includes the following.


1. "From 1836 until 1913, when the Federal Reserve Act was snuck through Congress, the United States did not have a central bank. It is no coincidence that this period of time marked the greatest real economic growth in the history of our nation.

Can you back this claim up?

Thanks.

"It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913. The following information comes from Wikipedia...

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled."
During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve

I checked your Wikipedia link. It doesn't say that.

Take a look at the graphs and tables above.

From this book

http://www.amazon.com/Contours-World-Economy-1-2030-Macro-Economic/dp/0199227209&tag=ff0d01-20

page 382 in Statistical Appendix A

US real GDP per capita
1870 - $2,445
1913 - $5,301

Do the math and that's a compounded annual growth rate of 1.8%.

This time period was marked by what is now known as The Long Depression. Before the Great Depression, the Long Depression was called The Great Depression.

Long Depression - Wikipedia the free encyclopedia

 

[PoliticalChic]

There are many who have a somewhat....pejorative... view of the Federal Reserve, some of which includes the following.


1. "From 1836 until 1913, when the Federal Reserve Act was snuck through Congress, the United States did not have a central bank. It is no coincidence that this period of time marked the greatest real economic growth in the history of our nation.

Can you back this claim up?

Thanks.

"It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913. The following information comes from Wikipedia...

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled."
During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve

I checked your Wikipedia link. It doesn't say that.

Take a look at the graphs and tables above.

From this book

Contours of the World Economy 1-2030 AD Essays in Macro-Economic History 9780199227204 Economics Books Amazon.com

page 382 in Statistical Appendix A

US real GDP per capita
1870 - $2,445
1913 - $5,301

Do the math and that's a compounded annual growth rate of 1.8%.

This time period was marked by what is now known as The Long Depression. Before the Great Depression, the Long Depression was called The Great Depression.

Long Depression - Wikipedia the free encyclopedia

"I checked your Wikipedia link. It doesn't say that."

No, you didn't.

I quoted the entire passage.....that's why it begins with quotation marks.


There are two quotation marks, and I simply gave you what you requested.

 

[Toro]

There are many who have a somewhat....pejorative... view of the Federal Reserve, some of which includes the following.


1. "From 1836 until 1913, when the Federal Reserve Act was snuck through Congress, the United States did not have a central bank. It is no coincidence that this period of time marked the greatest real economic growth in the history of our nation.

Can you back this claim up?

Thanks.

"It is not a coincidence that the greatest period of economic growth in U.S. history was between the Civil War and 1913. The following information comes from Wikipedia...

The Gilded Age saw the greatest period of economic growth in American history. After the short-lived panic of 1873, the economy recovered with the advent of hard money policies and industrialization. From 1869 to 1879, the US economy grew at a rate of 6.8% for real GDP and 4.5% for real GDP per capita, despite the panic of 1873. The economy repeated this period of growth in the 1880s, in which the wealth of the nation grew at an annual rate of 3.8%, while the GDP was also doubled."
During The Best Period Of Economic Growth In U.S. History There Was No Income Tax And No Federal Reserve

I checked your Wikipedia link. It doesn't say that.

Take a look at the graphs and tables above.

From this book

Contours of the World Economy 1-2030 AD Essays in Macro-Economic History 9780199227204 Economics Books Amazon.com

page 382 in Statistical Appendix A

US real GDP per capita
1870 - $2,445
1913 - $5,301

Do the math and that's a compounded annual growth rate of 1.8%.

This time period was marked by what is now known as The Long Depression. Before the Great Depression, the Long Depression was called The Great Depression.

Long Depression - Wikipedia the free encyclopedia

"I checked your Wikipedia link. It doesn't say that."

No, you didn't.

I quoted the entire passage.....that's why it begins with quotation marks.


There are two quotation marks, and I simply gave you what you requested.

I may be wrong but what it appears you did was to take a blog post from something called "Economic Collapse" which then linked it to Wiki. So I went to Wiki and the link you posted, and I couldn't find it. Maybe I'm just bad at finding things, but when you search the web page for "4.5%," "6.8%" or "Gilded," your quote doesn't come up. Perhaps the passage was removed after the blog post was made.

Economic history of the United States - Wikipedia the free encyclopedia

Nonetheless, the claim that the time period 1870-1913 was the most prosperous in our history is contradicted by the graphs and tables above.