I was reading “America’s Great Depression” by Rothbard and according to the book the 8 years prior to the great depression there was a 65% (8.12%/year) increase in the TMS. According to the chart on this site, the period of late 2000-2007 there has been an 83% increase (11.8%/year). What would this tell us about the severity of the coming recession/depression?
Also from the TMS chart, you can see that in about 1983 there was 782 billions dollars, and by 1987 (it’s hard to tell exactly) there was 1.782 trillion. That’s a 128% increase (25.6% per year.)
How come nothing bad like the great depression happened after 1987? You would think that given the ABCT, we would of had some horrible malinvestment from such a massive inflation.
Does the 1983-1987 inflation disprove the ABCT?
Why would it “disprove” it? Empirical facts, even if they are such as you say, could not do such a thing. Ceteris could well be imparibus (e.g. population/economic growth.) Besides, the Great Depression was as severe as it was because of the Fed’s mismanagement of the whole affair. Rothbard details how it managed to turn what would otherwise be a normal recession into the massive depression it became. There has been horrible malinvestment, though, I just think the Fed has managed to delay it so far.
-Jon
You should edit your tags and comma separate the terms/phrases.
ABCT, inflation, Great Depression
etc…
Nice research btw.
Jon,
Well, from 1921-1928 there was 12.395 increase in the US population. From 1983-1987 there was 4.48. How would that effect it?
Also, the Fed has covered up the worst inflation in history (by 2 times!) for 20 years???
That was just an example of how ceteris can be imparibus, hence I used e.g. and not i.e. And sure it can. Faulty statistics anyone? What threw me off was the comment that this “disproves” the ABCT. How? One thing I’m unclear on, is whether this inflation was domestic, or was the currency exported, so to speak, to other countries like China? That is also important, and could easily explain why such inflation went unnoticed.
-Jon
I did not comment that this disproves ABCT, I asked if it disproves ABCT. I ask because it was the biggest inflation in th history of the country (in % terms), twice as big as before the great depression, yet nothing happened. That’s an interesting point about exporting the inflation.
Yeah, and it isn’t immediately clear either. A friend of mine brought it to my attention the other day, that countries like the US are capable of exporting their currency and thus are likely to experience the effects of their inflation less rapidly than economies which are more closed, as the currency is in much wider circulation. It’s complementary to the fact that the Fed’s statistics are not worth the paper they’re printed on. As for it disproving the ABCT, I don’t see how. I was just curious what made you think it could; my apologies for poorly phrasing that. Something to realize is that the ABCT does not make specific predictions in terms of exact dates, it only offers qualitative predictions as to what the necessary consequences of a policy will be so long as all else remains equal. Right now, a recession is looming as a necessary correction of the Fed’s previous inflationary policies. The Fed might try to dodge it via more inflationary policies, or, perhaps, allow it to take place, which is unlikely. The longer it can push back the negative effects of its actions, the longer it can keep its scam up. It cannot do so indefinitely though.
-Jon
The 1920 inflation was followed by a recession with the burst of a stock bubble. There have been MUCH more inflationary periods followed with a necessary recession. This kind of general events don’t happen without some catalyst like credit expansion. Now, the big difference in the Great Depression was the disastarous policies of Hoover and Roosevelt, and this isn’t controversy.
Am I nuts, or do I not remember a recession with rising gold prices etc around the time of the gulf war I?