Wednesday, October 31, 2007

The Fed will Lead us to Ruin I say!!!

So, now that he's not in charge, the maestro sez that without a gold standard or currency board, "all of history" tells us that we will have rampant inflation.

Can this fool sink any lower?? (I mean yes, he might be right, but where where these libertarian views when he was the head of the organization he's now throwing under the bus???).

note: final sentence amended.


Anonymous said...

He is not right about what "all of history" tells us about gold or currency board and inflation. We have had "high" inflation 8 years ('73-'81) since leaving the real gold standard under FDR. And even that's a stretch, because 14% really isn't "rampant inflation"

Moreover, the academic consensus holds that the Gold Standard was a, if not the key factor in causing the Great Depression. Yes, inflation fell in the 1930s, but this gain was hardly costless.

Oh, and then there was the Great Depression of the 1890s.

Finally, compare business cycle volatility under Gold and Not Gold? The data are all on the NBER website--The "fiat" money system is associated with much less output volatility than the gold standard. Is this accidental?

Thus, it seems unreasonable to focus on the good of the Gold Standard (low inflation) and the costs of fiat money (supposedly high inflation), while ignoring entirely the costs of the gold standard and gains of the fiat system.

Angus said...

I agree that whether he's right about the lessons of history (at least for the US) is debateable, but what I am trying to focus on here is the incredibly arrogance and hypocracy of this guy.

Anonymous said...

Tommy the Englishman, a friend of KG (or at least he thinks he is that lucky) is very happy with this stupidity! After all, me get paid in pounds with student loans in American monopoly money!


Anonymous said...

To clarify, Tommy the Englishman would be the lucky one if the KG were his friend. He would even pay him (in dollars, of course)