Between 1792 and 1912, the United States saw inflation at an average rate of 0%

[Admiral Yi]

Notice the wild swings in inflation/deflation given in Ti'm's link. There was a deflationary trend in the 19th century interrupted by gold rushes that increased the money supply. Without the gold rushes there would have been stagnation.


(There is a typo  for "Tim's" above, but it seems somehow appropriate so i will leave it in)

I believe what caused those wild swings was the boom and bust cycle of unregulated banking.

[Martinus]

Here are the average annual growth rates of the US economy, on a decade by decade basis, during 1870-2000, ordered from the lowest to the 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%.

As you can see, the biggest growth happened during 1940-1990 (so, from the FDR era until the beginning of the Reagan/Bush era), not during the gold standard era.

[Syt]

Isn't another problem with the gold standard these days that we found a practical use for gold besides currency/jewelry?

[Martinus]

Isn't another problem with the gold standard these days that we found a practical use for gold besides currency/jewelry?

I suppose you could find some other useless material to be used for the standard - of course that does not address the point that fiat currency is infinitely better in terms of the state's ability to run a sensible economic policy and I am surprised anyone is even arguing the opposite.

[jimmy olsen]

I don't understand.  Between 1792 and 1912, the US inflation rate is 0%.  So what?  I am quite sure the US economy in 1912 is much better compared with 1792.  What is the point?

Gold standard was awesome and Federal Reserve sucks I guess.

Wait a minute.  I am no economist but I think the gold standard has pretty much been discredited after the Great Depression, no?  Since the supply of gold is limited by physical availability, mining capacity etc, it seems unreasonable to constrain the supply of money by availability of gold.  I mean, everybody sees the problems with an over-supply of money, but artificially linking the supply of money with the supply of gold doesn't seem a good solution. 

Is somebody really suggesting that it is a good idea for the US to go back to the gold standard? 

No, but it was a neat coincidence, and I used the opportunity to stir the pot.

[jimmy olsen]

Here are the average annual growth rates of the US economy, on a decade by decade basis, during 1870-2000, ordered from the lowest to the highest:

(1) Average Growth Rate 1921–1930: 1.27%
(2) Average Growth Rate 1911–1920: 1.28%

These two decades being the lowest seem very counter intuitive to me.

[Martinus]

Here are the average annual growth rates of the US economy, on a decade by decade basis, during 1870-2000, ordered from the lowest to the highest:

(1) Average Growth Rate 1921–1930: 1.27%
(2) Average Growth Rate 1911–1920: 1.28%

These two decades being the lowest seem very counter intuitive to me.

Those were the last two decades on the gold standard.

[DontSayBanana]

Picketty, right or wrong, is the big idol of the European left because he gives -at the very least- an excuse of thinking that the radical left was actually right, and the socialist experience failed not because it is inherently wrong, but because it was not done right.

It is rather hard to disprove an experiment about lightning by making a conclusion about pond scum, so he's not wrong that you can't conclude socialism failed given our examples of it.  Though humans are hierarchical by nature and not communal, so it is handwaving away the obvious problem that "successful" socialism is unnatural and so virtually impossible to implement.

[Martinus]

Saying that Picketty argues in favour of socialism is ridiculous.

[crazy canuck]

Picketty, right or wrong, is the big idol of the European left because he gives -at the very least- an excuse of thinking that the radical left was actually right, and the socialist experience failed not because it is inherently wrong, but because it was not done right.

It is rather hard to disprove an experiment about lightning by making a conclusion about pond scum, so he's not wrong that you can't conclude socialism failed given our examples of it.  Though humans are hierarchical by nature and not communal, so it is handwaving away the obvious problem that "successful" socialism is unnatural and so virtually impossible to implement.

The main problem with Picketty's book is people comment on it without having read it

[Tamas]

Picketty, right or wrong, is the big idol of the European left because he gives -at the very least- an excuse of thinking that the radical left was actually right, and the socialist experience failed not because it is inherently wrong, but because it was not done right.

It is rather hard to disprove an experiment about lightning by making a conclusion about pond scum, so he's not wrong that you can't conclude socialism failed given our examples of it.  Though humans are hierarchical by nature and not communal, so it is handwaving away the obvious problem that "successful" socialism is unnatural and so virtually impossible to implement.

The blatant racism/arrogance inherent in the "socialism can work if done by the right people" just adds to the enjoyment, BTW.

[Martinus]

Picketty, right or wrong, is the big idol of the European left because he gives -at the very least- an excuse of thinking that the radical left was actually right, and the socialist experience failed not because it is inherently wrong, but because it was not done right.

It is rather hard to disprove an experiment about lightning by making a conclusion about pond scum, so he's not wrong that you can't conclude socialism failed given our examples of it.  Though humans are hierarchical by nature and not communal, so it is handwaving away the obvious problem that "successful" socialism is unnatural and so virtually impossible to implement.

The blatant racism/arrogance inherent in the "socialism can work if done by the right people" just adds to the enjoyment, BTW.

But the history of the 20th century shows that socialist policies have in fact worked extremely well in more developed countries - such as the US - than they did in Russia.

[Berkut]

I long ago figured out that the word "socialism" means radically different things to different people.

[Martinus]

Well, socialism means social ownership and control of the means of production and cooperative management of the economy.

The US is not a socialist state, but social-democracy is a (generally successful) attempt to implement individual socialist policies in a capitalist democracy - and many post-war and post-New Deal policies of the US government fit the bill.

I am not sure what Tamas thinks Picketty is advocating but obviously he is not advocating changing the economies of Western countries into socialist ones - but to restore some of the social democrat policies that were rolled back during the Reagan/Thatcher era.

[Berkut]

Well, socialism means social ownership and control of the means of production and cooperative management of the economy.

I would say that the definition is social ownership OR control/regulation, not AND control/regulation.

And therein lies the critical difference between socialism that gets people all bonkers, and socialism that every western country engages in as a matter of course, and yet people still pretend like it doesn't happen.