The answer would be whatever a market system would have provided but the existence of a Gosplan or Federal Reserve changes the equation automatically. I won’t mention the involuntary arm spasms when martial music is played. [] The price of hotel rooms, air fares, vacation trips to Disney World etc, all drop, making vacations cheap. They jump up in September 1931, naturally because people were afraid the U.S. would devalue too. We had one year of deflation, and one year of steep recession. Neither the wage shock nor the deflationary shock would have produced a depression on their own (just a recession) together they produced a depression.Summer wants fiscal easing, Sumner wants quantitivate easing. Mises obviously acknowledges that don’t have to be the case, but most “modern” Austrians keep on talking about a world which is 150 years old. Money was “tight” in both years, indicating that the Friedman-Schwartz theory of the Great Depression needs some modification.”There is no mystery at all, in 1921 you had one year of deflation, in 1929-33, you had 3 1/2. The anchoring of inflation expectations is a hard-won success that has been achieved over the course of three decades, and this stability cannot be taken for granted. The right question to be focused on is how to stimulate demand.”So we have Krugman, Larry Summers, Scott Sumner and many other well known economist plublicly arguing for more easing. This is a scary situation. But at the same time, money in the country with low interest rates is “cheap” to borrow just as it is today in most countries (in fact, we’re involved in “currency wars,” with countries attempting to inflate their currencies to their own government’s advantage—not to the advantage of their citizens).
Isn’t that just common sense?
Stock Screener. Besides, a lot of the current problem may well be structural, in which case we’ll *only* get higher inflation — and needlessly give away the one good thing we’ve gotten out of this whole painful episode…”It’s a perfectly defensible intellectual position. That’s why counterfeiting is illegal, it’s stealing through the money system.
I locked in double-digit returns on my investments that ran years after Volcker busted inflation, etc. Therefore, the Federal Reserve’s policy actions as well as its communications have been aimed at keeping inflation expectations firmly anchored.”The mystery I was pointing to is why the 1921 recession didn’t lead to a great depression. Ther eis none; spraying the neignbors with bullits, keeping in your 8 year old sons room, keeping under lock and key–do difference at all.”So you claim that a Fed that delivers 5% steady NGDP growth is no better or worse than a hyperinflationary or hyperdeflationary Fed?And 1921 is very easy to explain. Austrian: “No, we are not atheists. 8 Macaulay (1938, p. 67): “ The student of interest rates will tend to be primarily concerned with the yields of the very highest grade bonds rather than with the yields of 160% of $ 91.2 billion is $145.9 billion. Read it again, he never mentions monetary policy. By then, FDR had already begun buying gold on foreign exchange, using tax revenues and funds from sale of U. S. bonds into the domestic economy. But the Federal Reserve’s renewed commitment as of last week to lower interest rates … But market rates such as T-bill yields fell by a similar amount in 1930.A commenter of the Austrian persuasion recently argued that the Fed made a mistake by driving rates so low during the Great Contraction, and that if they hadn’t done so, market forces would have weeded out the weaker and less efficient firms, laying the groundwork for a more sustainable recovery (I hope I got that right John.
[] They can refinance their home loans at a historic low 4%. The “gain” on gold seized by FDR’s order (about 70% over cost) was transferred to the super-secret slush fund called the Exchange Stabilization Fund. Thanks to the web, they can offshore call centesr and all sorts of services, probably even income tax preparation and coming soon architectural renderings in 3D. The Federal Reserve was bound to follow (purple line) and, sure enough, it did.If there isn’t a lot of demand, the bidders will pay less than the face value. We have been looking at what the Federal Reserve was doing during the 1920s.
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