Progress

Two centuries of US monetary stewardship charted @ ZH:

2Cmoney Click image to enlarge.

Red line is the CPI.
Blue line is the USD / Swiss Franc exchange rate.

December 13, 2013admin 18 Comments »
FILED UNDER :Political economy

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18 Responses to this entry

  • Stirner Says:

    Nice chart.

    It reminds me of how the whiny progressives like to blame the Bush housing bubble or the Reagan tax cuts for the financialization of the global economy. Idiocy.

    Nixon is the Republican they should be blaming.

    Perhaps Moldbug is right, and it really is all the fault of the fucking Quakers….

    [Reply]

    admin Reply:

    Among the things the Austro-libertarians are certainly right about: messing with Gold is sheer economic Satanism.

    [Reply]

    nyan_sandwich Reply:

    Are there good arguments you can point us to that make that case without reference to “intrinsic value” of gold?

    [Reply]

    admin Reply:

    Austro-Libertarians make no such appeal. Gold is reliable money because its supply is independent of government discretion. (Considering it as a proto-Bitcoin is basically accurate.)

    Posted on December 13th, 2013 at 1:54 am Reply | Quote
  • Kgaard Says:

    Well … the way I see it, leaving gold was largely inevitable. It’s interesting to note that the 1933 devaluation followed 12 years after the granting of the vote to women, and the 1971 devaluation followed 7 years after the Civil Rights Act. I don’t view this as coincidental. As you expand the franchise to a greater and greater percentage of the populace, you inevitably are dipping into the economically less successful half. The results are predictable: Tremendous increases in demands for transfer payments and an increase in regulatory capture. The only way to make an economy work in such an environment is to have periodic devaluations. That’s what we’ve done: 1933, 1971, 2002-2011.

    Just the price you pay for universal franchise!

    [Reply]

    admin Reply:

    Surprisingly enough, I have little disagreement with you on this. Democracy is cultural corruption, registered through the money system as elsewhere.

    [Reply]

    Posted on December 13th, 2013 at 4:00 am Reply | Quote
  • VXXC Says:

    Absolutely right about Universal Franchise = Mo money for Poh Folks…

    Meanwhile take cover, smart people at work: “At the same time, Mr. Ryan may have enhanced his stature as the conservative in Washington who can actually get things done.

    “He’s one of smartest people I know, trying to wrestle with our real problems,” Newt Gingrich, the former House speaker, said of Mr. Ryan. “Republicans made the calculation that they want to get to the election with no more fuss, focus on Obamacare and retake the Senate, so he produced a budget that raises spending and raises taxes. It’s as simple as that.”
    ==================================================================

    The Republican Plan for ObamaCare is probably that They Will Make It Rain.

    Which a smart people Democrat, or even Harry Reid could predict with the certainty of human nature being selfish, especially in Pols. And Smart People.

    [Reply]

    Posted on December 13th, 2013 at 12:11 pm Reply | Quote
  • vimothy Says:

    What is the *correct* rate of increase in the CPI, and why?

    [Reply]

    admin Reply:

    The correct rate is zero / negative growth, reflecting productivity improvement, and distributing the benefits elsewhere than to the state.

    [Reply]

    vimothy Reply:

    What makes zero better than two percent?

    [Reply]

    admin Reply:

    Two percent.

    vimothy Reply:

    In that case, set it to minus eight percent — or minus twenty, or . . .

    Nick B. Steves Reply:

    Hard to see on the chart, but Jim Grant has said on a couple occasions that secular CPI fell about 1%/yr between 1870 and 1910, during the halcyon years of the Real Gold Standard, and not exactly the worst time on net to have been an American. Not sure of the gold dilution rate during that same period, but historically it runs about 2%/yr.

    [Reply]

    admin Reply:

    If you click over to the ZH post, you can blow up the image to a more legible scale.

    I’m actually quite averse to consequentialism on the gold question — it amounts to the suggestion that systematic dishonesty is OK if it delivers the goods. We wouldn’t accept that argument in science, and we shouldn’t accept it is religion (although I see a depressing amount of it in that context), so why accept it in economics — which should be rooted in honest transactions? Taking money off gold is lying. It’s reality evasion. Better honest hunger than mendacious opulence.

    [Reply]

    Kgaard Reply:

    “Better honest hunger than mendacious opulence.” There was a lot of honest hunger around in the depressions of the 1870s and 1890s. Old-timers in the 1930s used to scoff, saying, “You should have seen the 1870s … now that was a REAL depression.” The problem with coming at this in a strictly moralist way is that growth requires risk-taking, and risk-taking requires credit (usually) and whenever there’s credit there is the prospect of overdoing it, leading to crashes and depressions. Then what do you do? Historically the answer was “have a reset.” But you can’t have a full reset in a democracy with fixed contracts for everything under the sun. Thus, the ONLY reasonable answer is periodic devaluations. There is no other way.

    Gold and silver can still be used as quasi-currency today, and of course there is Bitcoin. But for the legal tender of nation states in democracies, it’s pretty much got to be floating currency …

    Posted on December 13th, 2013 at 2:23 pm Reply | Quote
  • admin Says:

    @Kgaard — I’d agree with everything you say, except that you treat democracy as an axiom. Assuming democracy, the only policy options are horrible. So …

    [Reply]

    Kgaard Reply:

    Well, that would seem to bring us to the topic of Seasteading. Though it’s worth noting that even monarchies such as Singapore and the Gulf States have floating currencies. It’s just hell on everybody concerned if your currency appreciates against everybody else’s in the world. The Swiss tried to maintain their gold peg for a couple years after 1971 but had to throw in the towel. All manufacturing was dying. Only the bankers were doing well …

    [Reply]

    Posted on December 13th, 2013 at 5:13 pm Reply | Quote
  • VXXC Says:

    Remember Government is the True Name of God.

    Nothing must be done to take a farthing from it, except in out years [the future]. That is, never.
    =============================================================
    Economics is War by Money. That’s all.
    =============================================================
    In a sane world…

    The money must be pegged to something real, even if it’s hours worked.

    You could actually have several forms of money [for those who wish to play with it instead of produce or toil] tied to different commodities. Just as there was usually a Bi-Metallic standard [at least] in practice.

    [Reply]

    Posted on December 13th, 2013 at 8:41 pm Reply | Quote

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