GuyInTaiwan wrote:Alkibiades wrote:I hear you, but all the historical evidence suggests that economic growth under a gold standard was steadier than it was prior to the creation of the Fed. Again, not only economic growth, but politically, the world was more stable. This notion that the money supply has to be constantly ballooned and then crushed and that there is someone who knows how and when to do this is groundless.
I'm not entirely sure I'm reading that underlined sentence correctly. Are you claiming that prior to 1913, the world was more politically stable? I really am not too sure of that. I think the thing that distinguishes the political instability of the 20th century was that it was, ideological, but more importantly, technology really allowed for great violence.
You make a great point. It is extremely difficult to compare one century to another, and as you point out, there were tremendous conflicts prior to central banking and there are a host of factors to consider. Globalization, more generally, from the "Columbian Exchange" on and technological development. It is hard to disentangle all the elements, if it is even possible.
And, it has occurred to me that monetary debasement might ultimately be consequence rather than cause of some larger globalization process. The establishment of the Fed, for example, occurred during a time of great euphoria regarding the possibilities of social engineering and transformation of the human condition.
More to your point, if one were to throw in Kondratieff cycles, one could argue that the more things change, the more they stay the same.
Perhaps I can refine my point, though. That the economic impact on the sociopolitical sphere has been more dramatic since the creation of the Fed, and insofar as central banking has increased economic instability, it has increased sociopolitical instability. Can I argue that World War II should be placed entirely at the door of the Federal Reserve? I don't mean it quite that way. But, the Depression that followed the bubble of the Roaring 20s can primarily be placed at its feet. And, we can at least say that the rise of 1930s totalitarianism and aggression was highly correlated with the collapse of the bubble.
I think, too, that the impact of the Depression on our collective memory is also a kind of evidence that something new has happened. "Depression" is the word we have for economic armageddon, although I believe that it was supposed to be a euphemism at the time it was coined. Prior to that, we had sharp, short-lived panics in the banking system. And, World War II still sets the bar for total war and inhumanity. Was the Holocaust qualitatively worse than other attempts at genocide? It is a hard thing to prove one way or the other, because of the technologies employed. But, I think something can be said for the heightened passion for extermination of nations, ethnicities, and classes during that period.
The best place for my argument to take refuge, I think, is to say that there is simply no evidence for the mainstream position, that central banking increases stability of any meaningful kind. And, secondly, there is good reason to at least suspect that it is heightening instability. When Krugman confronts Paul with empty assertions about the inevitability of his own position apart from its merits and tries to smirk down the other side, I think it is reasonable to question the foundation of his intellectual or moral authority on those kinds of matters. I am sure that Krugman is very good when it is a question of 'assuming X, then Y most follow', but he doesn't appear to have the capacity to question X, and his smirking and sighing and so forth suggest that he is aware of this to some extent. But, like I said before, I am a bit biased already.