Will someone please comment on Paul Krugman’s latest blog entitled “Modified goldbugism at the WSJ”
if only to enlighten those readers unfamiliar with Austrian economics who would be let astray by Krugman’s erroneous rantings?
No time to waste at NYT. It was not a true gold standard (i.e., the absence of any monopolistic, state-enforced “standard”) that prevailed in the 1920s-1930s. Krugman once again proves himself as stupid as a football bat.
You’ll notice most of it is name calling. “Those dummies at WSJ are always wrong.”
All he has to offer is a graph and a reference to another article of his.
That graph doesn’t explain WHY keeping the gold standard kept countries from escaping the depression. Odd that he omits that, wouldn’t you say?
Minus the explanation, that graph is like the one in this link: http://upload.wikimedia.org/wikipedia/en/0/04/FSM_Pirates.png , which proves that pirates are what prevented global warming in the past. In other words it’s an example of a well known fallacy that if one thing precedes another it is mistakenly assumed as a “proof” that it was the cause.
What about the article? I just read a little of it, so I will make my modest contribution to the discussion about one point there. He argues:
-
Had we kept the gold standard, the dollar would be worth many times more than it is now, because the price of gold has risen so wildly since we went off the gold standard.
-
A dollar that can buy alot of stuff means prices are low. This is called deflation.
-
We all agree that deflation is bad. [Yep, that’s what he says there!]
-
Ergo staying on the gold standard would have brought us bad things.
Let’s tackle this argument point by point.
- Had we stayed ON the gold standard, there would not be much reason for people to frantically seek gold, so it’s price [perhaps] would not have risen so madly. Look at now. A recession happens, people think their paper dollars will be worthless, so they try to exchange them for something they hope will not lose value. They think gold fits the bill [excuse the pun]. So the price of gold goes up.
Did the price of gold go wild when all money was on the gold standard? I’m no historian, but I’m betting that no. [Hopefully the more educated here can back this up or refute me.] Gold went up AFTER we went off the gold standard.
-
Yes, that’s true.
-
Nope, we don’t agree with that at all. I would love more deflation. i would love for my dollar to be able to buy 25 times as much as it does now.
He is probably assuming that we all agree that deflation causes unemployment. Well it doesn’t. Inflation causes unemployment. That’s what this whole site is about, it seems to me. I think as good a place as any to read about this is What Has Govt Done to Our Money, a shortish work by Rothbard [that I haven’t finished yet].
- The refutaion of either points 1 or 3 destroys this one. Since both 1 and 3 have both been refuted, this one is doubly destroyed.
General observations: If he is smart enough to win a Nobel Prize, and yet presents this kind of trash to the reading public, as I’ve seen thrice from him already, he must be a sophist. He is being paid by someone to use his prestige to sell the gullible clever lies. Maybe he’s being overpaid.
Second observation. Plenty of tapes here [and on lewrockwell.com?] talk about the good that springs from the gold standard [or any standard that will be accepted by the public, as opposed to imposed on them]. The main one, as I understand it. is that it limits the amount of money the govt can print, which thereby prevents inflation.
What has Gov Done to Our Moolah is very enlightening on this whole subject.
Apparently it seems I was banned from commenting further on Krugman’s blog. I tried to tell people to read “What Has Government Done To Our Money?”
I posted a link to it and the audiobook.
I always found it funny that the left, so self consciously supportive of free speech to the point of advocating enablement of speech in many instances, tends to be so damn censurious when left to their own devices.
If you or anyone else would like to take the time, may I suggest you post and tell people, and possibly link to, “What Has Government Done To Our Money?”
-
The 19th century obviously doesn’t count for Krugman.
-
The British overvalued the pound sterling because they wanted it at its pre-war par level, not because of gold.
-
Japan also gained a lot of territory in their empire for their conquest need of raw material(U.S-British-Dutch embargo?), so of course