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Also, Edward, don't you think easing monetary policy just creates liberal bubbles and inflation? To prevent broad money from collapsing the Fed would have had to have massively ramped up the rate at which they print money. Aren't you completely against that?
See you keep throwing that "failing to follow the rules" bit in there.
dear, how slow are you??. I didn't say that, Friedman said that!! I take it since you have changed from me to Friedman you are conceding that Friedman did indeed say that the Fed failed to follow the rules by allowing the money supply to shrink by 1/3.
Try to follow more; so you have also agreed then that when Bernanke said to Friedman, "you're right, we did it", he was agreeing with Friedman.
Great, who's arbitrating the bet? Tell them to read A Monetary History of the United States by Friedman & Schwartz, and then give me my $10,000.
dear, Friedman's exact words were, " the rules in place at the time".
Also, Edward, don't you think easing monetary policy just creates liberal bubbles and inflation? To prevent broad money from collapsing the Fed would have had to have massively ramped up the rate at which they print money. Aren't you completely against that?
no no no!!!!! Friedman and common sense will tell you that under a gold backed reserve system or the current system the Fed must print all the money necessary to keep the money supply constant and thus maintain normal economic activity rather than let the supply fall to a level sufficient to maintain only recessionary level activity
I'm sorry, what do you think "the rules" were? They most certainly were not "don't allow the money supply to shrink". There were no rules about the growth of broad money. Tell us, tell us all Edward, what you think the rules were.
Also, Edward, don't you think easing monetary policy just creates liberal bubbles and inflation? To prevent broad money from collapsing the Fed would have had to have massively ramped up the rate at which they print money. Aren't you completely against that?
no no no!!!!! Friedman and common sense will tell you that under a gold backed reserve system or the current system the Fed must print all the money necessary to keep the money supply constant and thus maintain normal economic activity rather than let the supply fall to a level sufficient to maintain only recessionary level activity
Ohhh, are we finally getting somewhere. So you're an old monetarist? You want constant money supply growth? Yes?
I'm sorry, what do you think "the rules" were? They most certainly were not "don't allow the money supply to shrink". There were no rules about the growth of broad money. Tell us, tell us all Edward, what you think the rules were.
firstly please tell us whether you agree with Friedman that the money supply shrunk by 1/3 and that caused the Depression????????? Why keep changing the subject???
no no no!!!!! Friedman and common sense will tell you that under a gold backed reserve system or the current system the Fed must print all the money necessary to keep the money supply constant and thus maintain normal economic activity rather than let the supply fall to a level sufficient to maintain only recessionary level activity
Ohhh, are we finally getting somewhere. So you're an old monetarist? You want constant money supply growth? Yes?
dear, the idea behind the Gold Standard, even a reserve standard, or Friedmans computer in place of the Fed, was to keep the quantity of money and gold constant relative to population.
You, however, keep adding this bullshit about "not following the rules of the gold standard".
You, however, keep adding this bullshit about "not following the rules of the gold standard".
Friedman: "not following the rules of the gold standard".
Are you catching on?? I did not add even one letter let alone one word??? Are you catching on??
Great. Open up A Monetary History and cite me the part where he specifically said "the Depression was caused by the Fed not following the rules of the gold standard".
You, however, keep adding this bullshit about "not following the rules of the gold standard".
Friedman: "not following the rules of the gold standard".
Are you catching on?? I did not add even one letter let alone one word??? Are you catching on??
Reference it then. Give me the citation.
Do you think thats what Bernanke really meant? If you do you're being a goofy liberal again.
What he meant was we (the Fed) did it by not following the rules of the gold standard which required them to maintain the money supply rather than let it drop by 1/3 as the banks failed.
What caused the Great Depression? The Great Depression was 100% caused by the Federal Reserve. In the mid 1920s, the Federal Reserve used its cartel power to set interest rates at a really low level. This caused inflation and an economic boom. Politically-connected insiders knew that an economic boom was being created. At the start of the boom, they loaded up and debt and bought assets before inflation set in.
The Great Depression is blamed on "greedy speculators". With artificially low interest rates, it made sense to borrow and buy assets. If interest rates are 2% and inflation is 10%, then borrowing to invest is sensible. Many farmers and small business owners were forced to borrow to expand, to keep up with their competition.
The "greedy speculators" were acting independently in the "free market". The Federal Reserve and negative interest rates were the real culprit. The speculators were following the false signal the Federal Reserve was sending via artificially cheap interest rates.
what you say is mostly true but you have described a Fed boom, the Depression was caused by the Fed reaction to the bust that followed and prolonged by FDR's left wing policies not the least of which was an open hostility to business that caused them to withdraw.
Friedman: "not following the rules of the gold standard".
Are you catching on?? I did not add even one letter let alone one word??? Are you catching on??
Reference it then. Give me the citation.
I think you should pay 10,000 for being such an illiterate pighead. Bet $10,000
Ohhh, are we finally getting somewhere. So you're an old monetarist? You want constant money supply growth? Yes?
dear, the idea behind the Gold Standard, even a reserve standard, or Friedmans computer in place of the Fed, was to keep the quantity of money and gold constant relative to population.
Excellent. Now add the next layer. Back in the day Friedman thought that the velocity of money was stable. He abandoned that when it became clear that it wasn't.
When the demand for money increases given a fixed supply, the economic effects are as if the supply of money has fallen (and vice versa). So the next logical step, given unstable monetary velocity, is to offset changes in velocity with changes in the stock of money, yes?
Are you with me so far?
dear, the idea behind the Gold Standard, even a reserve standard, or Friedmans computer in place of the Fed, was to keep the quantity of money and gold constant relative to population.
Excellent. Now add the next layer. Back in the day Friedman thought that the velocity of money was stable. He abandoned that when it became clear that it wasn't.
When the demand for money increases given a fixed supply, the economic effects are as if the supply of money has fallen (and vice versa). So the next logical step, given unstable monetary velocity, is to offset changes in velocity with changes in the stock of money, yes?
Are you with me so far?
ok we'll ignore the Austrians for the moment, go on
Excellent. Now add the next layer. Back in the day Friedman thought that the velocity of money was stable. He abandoned that when it became clear that it wasn't.
When the demand for money increases given a fixed supply, the economic effects are as if the supply of money has fallen (and vice versa). So the next logical step, given unstable monetary velocity, is to offset changes in velocity with changes in the stock of money, yes?
Are you with me so far?
ok we'll ignore the Austrians for the moment, go on
Friedman started with the quantity theory of money: M*V = P*Y. As discussed, it was initially thought that V was constant. So the key to nominal stability was to grow M at a constant rate; Friedman's famous k-percent rule. That was basically old monetarism. Pick some monetary aggregate, grow it at a constant rate. Don't ever deviate from that growth rate to fight recessions or anything, all that does is create inflation in the long run. If M fell, money was too tight; if M increased money was too loose.
The problem is, V isn't constant. If velocity increases, that's economically equivalent to the money stock increasing; so the money supply has to shrink a little bit to offset the change in V. Vice versa: if V drops, that's the same as if the money supply were to collapse, so we have to increase the quantity of money until V is offset.
So the logical conclusion is that instead of targeting M, you should target M*V (which is Nominal GDP). Hayek, an Austrian, recognised this too.
Make sense?
Reference it then. Give me the citation.
I think you should pay 10,000 for being such an illiterate pighead. Bet $10,000
Stop acting like a child and produce the citation. If you refuse to cite it, you're admitting you're wrong.
ok we'll ignore the Austrians for the moment, go on
Friedman started with the quantity theory of money: M*V = P*Y. As discussed, it was initially thought that V was constant. So the key to nominal stability was to grow M at a constant rate; Friedman's famous k-percent rule. That was basically old monetarism. Pick some monetary aggregate, grow it at a constant rate. Don't ever deviate from that growth rate to fight recessions or anything, all that does is create inflation in the long run. If M fell, money was too tight; if M increased money was too loose.
The problem is, V isn't constant. If velocity increases, that's economically equivalent to the money stock increasing; so the money supply has to shrink a little bit to offset the change in V. Vice versa: if V drops, that's the same as if the money supply were to collapse, so we have to increase the quantity of money until V is offset.
So the logical conclusion is that instead of targeting M, you should target M*V (which is Nominal GDP). Hayek, an Austrian, recognised this too.
Make sense?
dear, where the hell are you going with this. Do you have any idea what your subject is???
I think you should pay 10,000 for being such an illiterate pighead. Bet $10,000
Stop acting like a child and produce the citation. If you refuse to cite it, you're admitting you're wrong.
ok if I do produce it please tell me exactly what you will say. Thanks
Just making sure we're clear. Can't look at the money supply, have to look at the money supply offset for velocity,
