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Originally posted by Communist I just said I backed off the gold standard is a cause of recession if you read my post correctly... "Let me correct myself from before. The gold standard did not cause recessions, as recessions are simply natural business cycles present in any system. But rather, commodity standards make recessions much worse than they ought to be." I gave you plenty of reasons why it is so. And I also did link you some things, except you choose to reject out of hand anything I'm linking you, so what's the point? You won't listen to Bernanke or even entertain the thought that he just might be right. It's fine if you disagree with him, but ffs, read the damn paper, then come back to me with some pointed criticisms. I even offered to send you a peer-reviewed research paper about the foundation of our modern international monetary system (which is the gold standard), but you haven't pm'ed me your email address so I could send it to you...the offer still stands.

Wait, I'm confused. You do or you don't believe that the gold standard caused the recessions of the 19th century?

Check your PM. Sending my email. Thanks!

After reading most of the Bernanke article, I'm still failing to see how the gold standard, again, caused the Depression. It appears as though he is trying to do the same thing the author of the previous article linked to me tried to say, which is correlation equals causation. Bernanke doesn't talk about all of the government stimulus, ease of credit or expansion of government during the Depression, as if none of that had anything to do with driving the country deeper into depression.

I will also say this, I don't really believe that only a gold standard alone would work either. I believe that the market itself should decide would currency it is to use and typically that has been gold AND silver and other natural metals. I also believe that the government is setting itself up for failure by simply saying "From now on, 1oz of gold is equal to $35." Well, obviously the real market value is going to change over time, especially when the government tries to print more paper notes.

And occrider, are my links from the vice president and economist in the Research Department of the Federal Reserve Bank of Cleveland not good enough because they are too easy to come by? haha

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Originally posted by DOOMBOT Yup, you and jerz did a fantastic job in here. I don't know how I'll ever be able to compete against Bernanke articles and Nixon videos. Carry on.

But the President of the Federal Reserve Bank in Cleveland... why, I think I'll let him make my argument for me!

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Originally posted by DOOMBOT After reading most of the Bernanke article, I'm still failing to see how the gold standard, again, caused the Depression.

nobody is saying it did.

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Originally posted by pkcRAISTLIN the single biggest contributor to the severity and prolonging of the Great Depression was rigid adherence to the gold standard.

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Originally posted by Lebezniatnikov But the President of the Federal Reserve Bank in Cleveland... why, I think I'll let him make my argument for me!

I've already made my case in this thread and previous ones. I came across his article and found that it was very well written and put together much better then I would have written it. So why not share it with you guys? I see no problem with linking to other sources, as I've asked others to do the same.

And besides, why did you wait to say this to me and not anyone else in this thread who has done the same? They also seem to be in favor of linking to other sources as well, which again, there is nothing wrong with.

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Originally posted by pkcRAISTLIN nobody is saying it did.

Ok, understood. I still rightfully disagree and believe the stimulus, expansion of government and ease of credit were much more destructive then the dollar being linked to gold. I mean, let's face it, the fact that we were on a gold standard didn't seem to stop the government from all of the "stimulus" that it created.

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Originally posted by DOOMBOT And besides, why did you wait to say this to me and not anyone else in this thread who has done the same? They also seem to be in favor of linking to other sources as well, which again, there is nothing wrong with.

I didn't "wait" to say it to anyone - but it's pretty hilarious that you immediately discredit Bernanke but cite the Vice President of the Cleveland Branch as a credible source. I'm not saying he's not - I'm saying that you pick and choose who to listen to based on whether you agree with them. That's a pretty heavy confirmation bias.

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Originally posted by Lebezniatnikov I didn't "wait" to say it to anyone - but it's pretty hilarious that you immediately discredit Bernanke but cite the Vice President of the Cleveland Branch as a credible source. I'm not saying he's not - I'm saying that you pick and choose who to listen to based on whether you agree with them. That's a pretty heavy confirmation bias.

I have listened to many of Bernanke's public videos on youtube and have read some of his work. I don't find him to be doing a very good job in his current seat and I also notice he leaves out a lot of important information in his writings, as I pointed out a few posts ago.

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Originally posted by DOOMBOT I have gotten into many arguments on this forum with those who believe that inflation is the rise in price of goods, where I have said it was actually the increase in money. These articles back up what I am trying to say and figured that since, like I said, some have claimed because I don't have an economics degree I can't discuss economics, I'd link them to these two articles, where the author should be able to hold more respect on the topic then I, for those who have disagreed with me.

I only read one article ("on the origin and evolution of the word inflation") but it absolutely does NOT back your position. That article tracks the history of the word inflation. It described how the definition has transformed into describing price increases. He ultimately concludes that an anti-inflation policy should only target money supply and not other causes of inflation. That does not mean he thinks your definition of inflation is the predominate or accurate definition.

In any event, this guy Michael Bryan is an economist in the research department in the Cleveland Bank (far from an important or influential role). Let's not overstate his influence. His pedigree is less than spectacular (miami u of ohio and case western).


EDIT - i just read his second article. In that article, he unsuccesfully (in my opinion) attempts to make a distinction between the rise in consumer prices and what he calls inflation (i.e., money supply). In reality, what he is saying is that the increase in money supply is a component of the increase in the price of consumer goods and the two concepts need to be clearly separated. His insistence that consumer prices increases should be distinction from inflation is unncessary because, as i said before, he is actually arguing that money supply is one component of an increae in money supply.

Moreoever, you need to understand his perspective. He works for the Fed, which influences money supply. He is trying to make people understand that the fed is not trying to influence the other components affecting consumer prices, it is just trying to influence money supply.

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Originally posted by jerZ07002 I only read one article ("on the origin and evolution of the word inflation") but it absolutely does NOT back your position. That article tracks the history of the word inflation. It described how the definition has transformed into describing price increases. He ultimately concludes that an anti-inflation policy should only target money supply and not other causes of inflation. That does not mean he thinks your definition of inflation is the predominate or accurate definition.

Your last sentence is meaningless to me. I really don't care whether he agrees with me or not on the true definition of the word, only that he has acknowledged how perverted the meaning has become and how it has lead to a lot of confusion in regards to the effects that inflation has on the increase in prices. It's more or less just an added bonus that he actually does believe that inflation is the increase in money supply. You've got me on how you could believe otherwise. I don't see how he would have become inclined to write such an article and at the same time believe opposite of what he wrote.

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In any event, this guy Michael Bryan is an economist in the research department in the Cleveland Bank (far from an important or influential role). Let's not overstate his influence. His pedigree is less than spectacular (miami u of ohio and case western).

The obsession with where people graduate and the degrees that they have is rather strange with you and many others. As I've stated before, you act as if knowledge can not be obtained anywhere outside of a prestigious university. Let's take someone who you probably admire; Ben Bernanke. He was self taught in calculus. Now, had he not gone to a very good school, would you have discredited anything he would have had to say in regards to calculus? Your logic just escapes me on this one.

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EDIT - i just read his second article. In that article, he unsuccesfully (in my opinion) attempts to make a distinction between the rise in consumer prices and what he calls inflation (i.e., money supply).

I just want to acknowledge the fact that in the first quote, above, you seem to get the impression that the author doesn't think that my "definition of inflation is the predominate or accurate definition", but your quote here does in fact give us this impression.

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In reality, what he is saying is that the increase in money supply is a component of the increase in the price of consumer goods and the two concepts need to be clearly separated. His insistence that consumer prices increases should be distinction from inflation is unncessary because, as i said before, he is actually arguing that money supply is one component of an increae in money supply.

You've lost me. Especially where I have underlined.

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Moreoever, you need to understand his perspective. He works for the Fed, which influences money supply. He is trying to make people understand that the fed is not trying to influence the other components affecting consumer prices, it is just trying to influence money supply.

He also acknowledges that money supply will effect prices. That is just very basic economics.

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Originally posted by DOOMBOT Your last sentence is meaningless to me. I really don't care whether he agrees with me or not on the true definition of the word, only that he has acknowledged how perverted the meaning has become and how it has lead to a lot of confusion in regards to the effects that inflation has on the increase in prices. It's more or less just an added bonus that he actually does believe that inflation is the increase in money supply. You've got me on how you could believe otherwise. I don't see how he would have become inclined to write such an article and at the same time believe opposite of what he wrote.

you're distorting what he wrote to suit your needs.

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Originally posted by DOOMBOT The obsession with where people graduate and the degrees that they have is rather strange with you and many others. As I've stated before, you act as if knowledge can not be obtained anywhere outside of a prestigious university. Let's take someone who you probably admire; Ben Bernanke. He was self taught in calculus. Now, had he not gone to a very good school, would you have discredited anything he would have had to say in regards to calculus? Your logic just escapes me on this one.

smart people tend to go to the best schools!

that doesn't mean people who go to less prestigious schools are not intelligent, but without knowing more, the benefit of the doubt goes to a harvard grad over a case western grad. To understand why you actually need to go through the admission process. Whether we like it or not, in reality, university admissions officers do work for the general population that individual people could not do alone (i.e., evaluate the intelligence of a large pool of people - in the real world this is actually one of the most useful functions of universities, it makes the process of hiring employees much more efficient). That is, by being admitted to a particular university it implicitly shows a person's intellectual aptitude (obviously people can change that perception by interacting with others, but the point is you can make a quick judgement, which will be correct more times than not). When harvard accepts a student, 99 time out of 100 that student will have more intellectual capabilities (drive and a good track record) than someone going to miami u of ohio. School does matter. It's really obvious to people who venture into the real world.

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Originally posted by DOOMBOT I just want to acknowledge the fact that in the first quote, above, you seem to get the impression that the author doesn't think that my "definition of inflation is the predominate or accurate definition", but your quote here does in fact give us this impression.

i could have been clearer but i read the articles at different times. From what i remember about the first article, he doesn't really assert a position that the expansion of money supply is 'real' inflation. he simply narrates a history of the definition of the term. After submitting the post i read the second article, and my impression wasn't that he necessarily cared about the definition of inflation, rather, that consumer prices are affected by two things: (i) what he called cost of living increases (all factors not money supply), and (ii) effects of expansions/contractions in money supply. Moreover, people need to differentiate the two factors since the fed can control the money supply, whereas, it doesn't have control over cost of living increases.

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Originally posted by DOOMBOT You've lost me. Especially where I have underlined.

my bad, that was an error - i meant money supply is one component affecting consumer prices.

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Originally posted by DOOMBOT He also acknowledges that money supply will effect prices. That is just very basic economics.

that's actually his main point.

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Originally posted by DOOMBOT Wait, I'm confused. You do or you don't believe that the gold standard caused the recessions of the 19th century? Check your PM. Sending my email. Thanks!

I don't think I could have been any clearer here. I said the gold standard does not cause recessions. I originally said, "The 1800's were marked by extremely high cyclical volatility and protracted recessions, inadvertently caused by...the gold standard." Notice how I said a protracted. Recessions happen in ALL economic systems as a natural business cycle. I go on to say that the gold standard made recessions worse than they ought to be. The most prominent reasons why is...

1) The money supply of a gold standard is not tied to the needs of the economy, but rather, to the supply of gold. This is a reason why governments repeatedly had to suspend convertibility into gold finally culminating in the eventual abolishment of the gold standard.
2) The gold standard is far far more likely to have a run on the currency during economic downturns (which are always inevitable) because everyone wants gold. This is as destructive to an economy as wide scale bank runs.

Your problem with the fiat system is you don't trust the central bank to keep inflation low. The problem with that is, if you don't trust it to keep inflation low, why would you trust it to stay on a gold standard?

I want you to answer 2 questions question for me. This is based on empirical data and yet you still seem to deny it:

1) Why did countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escape the Great Depression?

2) Why did countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffer the worst from the Great Depression?

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Originally posted by jerZ07002 that doesn't mean people who go to less prestigious schools are not intelligent, but without knowing more, the benefit of the doubt goes to a harvard grad over a case western grad. To understand why you actually need to go through the admission process. Whether we like it or not, in reality, university admissions officers do work for the general population that individual people could not do alone (i.e., evaluate the intelligence of a large pool of people - in the real world this is actually one of the most useful functions of universities, it makes the process of hiring employees much more efficient). That is, by being admitted to a particular university it implicitly shows a person's intellectual aptitude (obviously people can change that perception by interacting with others, but the point is you can make a quick judgement, which will be correct more times than not). When harvard accepts a student, 99 time out of 100 that student will have more intellectual capabilities (drive and a good track record) than someone going to miami u of ohio. School does matter. It's really obvious to people who venture into the real world.

I don't disagree with you, but there are people who get into Harvard and elect to go somewhere that has offered to pay for four years.

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Originally posted by DOOMBOT Ok, understood. I still rightfully disagree and believe the stimulus, expansion of government and ease of credit were much more destructive then the dollar being linked to gold. I mean, let's face it, the fact that we were on a gold standard didn't seem to stop the government from all of the "stimulus" that it created.

The government can stimulus all they want. If the money supply is falling precipitously, it doesn't matter what the government does. The problem during the Great Depression was the Federal Reserve refused to increase the money supply, even though it was falling off a cliff. That is the jist of Bernanke's paper I linked to you. If there is not enough money in an economy, it's like a patient dying of blood loss, they need blood transfusions to stay alive. That is why the Roosevelt administration suspended convertibility into gold. To stop the run on the currency and enable an increase in the money supply.

Thought I would pass along another article for those interested. One of the interesting points brought up was the fact that the US held excess gold reserves throughout the 1920s and 30s and didn't appear to be restricted to the gold standard as many believe. See, Table 2.

http://www.aier.org/ejw/archive/doc...nent&format=raw

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Originally posted by Communist I don't think I could have been any clearer here. I said the gold standard does not cause recessions. I originally said, "The 1800's were marked by extremely high cyclical volatility and protracted recessions, inadvertently caused by...the gold standard." Notice how I said a protracted. Recessions happen in ALL economic systems as a natural business cycle. I go on to say that the gold standard made recessions worse than they ought to be. The most prominent reasons why is... 1) The money supply of a gold standard is not tied to the needs of the economy, but rather, to the supply of gold. This is a reason why governments repeatedly had to suspend convertibility into gold finally culminating in the eventual abolishment of the gold standard. 2) The gold standard is far far more likely to have a run on the currency during economic downturns (which are always inevitable) because everyone wants gold. This is as destructive to an economy as wide scale bank runs. Your problem with the fiat system is you don't trust the central bank to keep inflation low. The problem with that is, if you don't trust it to keep inflation low, why would you trust it to stay on a gold standard? I want you to answer 2 questions question for me. This is based on empirical data and yet you still seem to deny it: 1) Why did countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escape the Great Depression? 2) Why did countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffer the worst from the Great Depression?

Communist, you're getting your questions from the very same article that I already debunked. I'm not going to go through this again. Sorry!

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Originally posted by DOOMBOT Communist, you're getting your questions from the very same article that I already debunked. I'm not going to go through this again. Sorry!

You didn't debunk anything. You'r looking for proof of why the gold standard causes recessions which is not what anyone is saying at all. And simply throwing out, "correlation doesn't equal causation", is hardly 'debunking'. And as I just said in a previous post, Hoover could have put all the stimulus he wanted. If the money supply is falling precipitously and no measures are in place to increase it, government stimulus means nothing. That is why Roosevelt suspended convertibility to gold. Also, in your 'debunking' post, nothing was said about the two questions I am now asking you to debunk based on empirical evidence. I'd like to move away from ideological talking points for a second. Explain this...

1) Why did countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escape the Great Depression?

2) Why did countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffer the worst from the Great Depression?

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Originally posted by Communist You didn't debunk anything. You'r looking for proof of why the gold standard causes recessions which is not what anyone is saying at all. And simply throwing out, "correlation doesn't equal causation", is hardly 'debunking'. And as I just said in a previous post, Hoover could have put all the stimulus he wanted. If the money supply is falling precipitously and no measures are in place to increase it, government stimulus means nothing. That is why Roosevelt suspended convertibility to gold. Also, in your 'debunking' post, nothing was said about the two questions I am now asking you to debunk based on empirical evidence. I'd like to move away from ideological talking points for a second. Explain this... 1) Why did countries that were not on the gold standard in 1929--or that quickly abandoned the gold standard--by and large escape the Great Depression? 2) Why did countries that held to the gold standard through 1933 (like the United States) or 1936 (like France) suffer the worst from the Great Depression?

1) I know nothing of the countries that were not on the gold standard during the US Great Depression so will not give an answer at this time. I'm sure you and I will be in touch for a while so whenever I get around to researching, I'll try and give you an answer.

2)I do know that the US went through a Great Depression because of the easy credit and malinvestment that ran wild through the 1920s. What happened afterward was a correction in that bubble and the Depression lasted for 15 years because of much of the stimulus created by Hoover and Roosevelt. Had they taken the same measures that Harding did in 1920, you'd probably have seen that bust not last as long as it did. Remember, the Depression of 1920 was "the sharpest and fastest depression in US history."

The Great Depression can can very much be related to how our government is handling our current situation. You can also relate it to Japan in the 1990s.

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Originally posted by DOOMBOT 1) I know nothing of the countries that were not on the gold standard during the US Great Depression so will not give an answer at this time. I'm sure you and I will be in touch for a while so whenever I get around to researching, I'll try and give you an answer. 2)I do know that the US went through a Great Depression because of the easy credit and malinvestment that ran wild through the 1920s. What happened afterward was a correction in that bubble and the Depression lasted for 15 years because of much of the stimulus created by Hoover and Roosevelt. Had they taken the same measures that Harding did in 1920, you'd probably have seen that bust not last as long as it did. Remember, the Depression of 1920 was "the sharpest and fastest depression in US history." The Great Depression can can very much be related to how our government is handling our current situation. You can also relate it to Japan in the 1990s.

You didn't answer the questions my friend. Go ahead and do your research. I'm dying for an answer. You can always admit you'r wrong too! I'v had to do it; always made me a better debater in the end..

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Originally posted by Communist You didn't answer the questions my friend. Go ahead and do your research. I'm dying for an answer. You can always admit you'r wrong too! I'v had to do it; always made me a better debater in the end..

I did answer why the US stayed in a Depression for 15 years. I also admitted I don't know anything about the countries who weren't on a gold standard.

Let me ask you this. Did the countries who were off the Gold Standard have a "New Deal?"

http://www.federalreserve.gov/BOARD...108/default.htm

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Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

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Originally posted by DOOMBOT I did answer why the US stayed in a Depression for 15 years. I also admitted I don't know anything about the countries who weren't on a gold standard.

I'm asking about more than just the United States. Forget about the United States for a second. Why did the countries who stayed on the gold standard suffer most from the Great Depression?

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Let me ask you this. Did the countries who were off the Gold Standard have a "New Deal?"

The premise of the question is wrong. The failure of the Federal Reserve to increase the money supply and the collapse of the financial system caused the severity of the Great Depression.

Let's take a look at the UK which abandoned the gold standard in 1931. The British had seen the deflation occurring the United States with no response from its central bank. The British could reliably predict the same occurring in their economy as the Great Depression spread across the Western world. Runs on the currency caused by the convertibility of paper currency into gold is a primary reason as to the severity of the Great Depression. So it should no surprise to you that the British abandoning the gold standard, and thus, suspending convertibility of the currency into gold, spared them the ravages that affected countries like the United States and France. Actually, these countries more than abandoned the gold standard. They were forced off it. Even the United States had to suspended gold convertibility.

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Originally posted by DOOMBOT http://www.federalreserve.gov/BOARD...108/default.htm

Even the Federal Reserve admits it should have increased the money supply. Nothing new here...Bernanke also said, "I was not going to be the Federal Reserve chairman who presided over the second Great Depression." And he didn't. His Federal Reserve duly increased the money supply when the subprime crisis hit.

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Originally posted by Communist I'm asking about more than just the United States. Forget about the United States for a second. Why did the countries who stayed on the gold standard suffer most from the Great Depression? The premise of the question is wrong. The failure of the Federal Reserve to increase the money supply and the collapse of the financial system caused the severity of the Great Depression. Let's take a look at the UK which abandoned the gold standard in 1931. The British had seen the deflation occurring the United States with no response from its central bank. The British could reliably predict the same occurring in their economy as the Great Depression spread across the Western world. Runs on the currency caused by the convertibility of paper currency into gold is a primary reason as to the severity of the Great Depression. So it should no surprise to you that the British abandoning the gold standard, and thus, suspending convertibility of the currency into gold, spared them the ravages that affected countries like the United States and France. Actually, these countries more than abandoned the gold standard. They were forced off it. Even the United States had to suspended gold convertibility.

And when the US did suspend the gold standard, why did it take until the beginning of the War for the Depression to end?

Also, I'm interested in what your thoughts are in regards to the second to last link I posted and the fact that the US had more then enough gold reserves to expand the money supply to "Save" the US from Depression. This little fact shows us that the US didn't really seem to be restrained by being on a gold standard as one may typically believe.

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Originally posted by Communist Even the Federal Reserve admits it should have increased the money supply. Nothing new here...Bernanke also said, "I was not going to be the Federal Reserve chairman who presided over the second Great Depression." And he didn't. His Federal Reserve duly increased the money supply when the subprime crisis hit.

And still we have rising foreclosures, rising job losses, rising commercial loan losses and more ARMs to reset.

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