It wasn't without the boom/bust cycle. With the government backing banks you will always have booms and busts. But compared to 20th and 21st century busts, they were minuscule, because the scale of the inflation was much smaller and the government remedies were non-existent.Originally Posted by John X
No....read the links I already posted. The panics/depressions were severe, much much worse for the poor than modern recessions because of the general lack of overall wealth then compared to now. The Panic of 1873 was a decade long and known as the "great depression" until the 1930s. I'd invite you to take your own advice and read up on the topic before discussing them.
Last edited by John X; 11-26-2015 at 07:36 PM.
During the Great Depression, the US economy (as measured by GDP) fell by 26.7%. In the time since, we have not had any recession where it fell by over 20% (the 1937- 38 recession fell by 19% and the "Great Recession" we just went through GDP fell by ten percent and that was the second worst- all the rest were single digit retractions).
In the Century before the Great Depression, there were 14 recessions where GDP fell by 20% or more and six of those were over 30% collapses in GDP. Plus another eight which were worse than the Great Recession (more than ten percent) but under 20%.
https://en.wikipedia.org/wiki/List_o..._United_States
Last edited by Zippyjuan; 11-26-2015 at 07:46 PM.
Reading wikipedia isn't "reading up" on the topic. Most economists don't even think there was a recession in the 1870s anymore, let alone a "great depression".
How long did they last pre-1913 vs. post-1913? There's your rebuttal. Save your wikipedia links for someone you can actually convince with your nonsense.
I'll just say this is totally 100% false. Of course most (all?) economists agree with the wikiepedia/HS level understanding of the history. I agree reading wikiepedia doesn't make one an expert....but denying basic facts in it makes one a crackpot.
They are both less frequent and less severe post-1913.
Orthodox economic historians have long complained about the “great depression” that is supposed to have struck the United States in the panic of 1873 and lasted for an unprecedented six years, until 1879. Much of this stagnation is supposed to have been caused by a monetary contraction leading to the resumption of specie payments in 1879. Yet what sort of “depression” is it which saw an extraordinarily large expansion of industry, of railroads, of physical output, of net national product, or real per capita income? As Friedman and Schwartz admit, the decade from 1869 to 1879 saw a 3-percent-perannum increase in money national product, an outstanding real national product growth of 6.8 percent per year in this period, and a phenomenal rise of 4.5 percent per year in real product per capita. Even the alleged “monetary contraction” never took place, the money supply increasing by 2.7 percent per year in this period. From 1873 through 1878, before another spurt of monetary expansion, the total supply of bank money rose from $1.964 billion to $2.221 billion—a rise of 13.1 percent or 2.6 percent per year. In short, a modest but definite rise, and scarcely a contraction. It should be clear, then, that the “great depression” of the 1870s is merely a myth—a myth brought about by misinterpretation of the fact that prices in general fell sharply during the entire period. Indeed they fell from the end of the Civil War until 1879. Friedman and Schwartz estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. Unfortunately, most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era. For they have overlooked the fact that in the natural course of events, when government and the banking system do not increase the money supply very rapidly, free market capitalism will result in an increase of production and economic growth so great as to swamp the increase of money supply. Prices will fall, and the consequences will be not depression or stagnation, but prosperity (since costs are falling, too) economic growth, and the spread of the increased living standard to all the consumers.
- Murray Rothbard, History of Money and Banking in the United States
Right....so even in your quote he says that the conventional view is that it was a depression and only in his crazy revisionist history is it not. Your quote that "most economists" don't consider it a recession is totally wrong.
Frequency, I don't know, I haven't counted them. Though a few of them were caused by the Bank of the United States, the Fed's predecessor, so it's the same thing. Severity, I know you are wrong.
Don't have alternative stats to share? OK- let's also look at duration. Since the Great Depression, three lasted more than a year. In the previous century, only two were less than one year (out of 24). Some were four and five years. Time between recessions was also shorter prior to the Great Depression.
He wrote that some 15 years ago. Maybe it isn't a majority, but today many modern monetarists and even some Keynesians recognize the 1870s were a prosperous decade.
Can you find any examples of deflation during periods of economic growth in the United States? Or any other countries? It is a rarity- most deflation is associated with economic contraction.
Last edited by Zippyjuan; 11-26-2015 at 08:52 PM.
http://www.heritage.org/research/rep...lly-been-tamed
Did you read the paragraph you quoted?
Can you show any evidence of this?
In the 1800s it was the norm. https://research.stlouisfed.org/publ.../10/ES1030.pdf
The article I just linked. Also Wikipedia says so. https://en.wikipedia.org/wiki/Gilded...conomic_growth
Last edited by Krugminator2; 11-26-2015 at 08:59 PM.
Probably, but I'm not going to look for it. Who the $#@! cares? If they don't recognize it they are wrong.
The article lists only one three year period when both occurred.
Deflation is more a symptom and result than a cause of recessions. In the recession, people lost jobs and had less money to spend which means less demand for goods. Sellers lowered prices to try to draw back customers or to fight to keep market share or to get rid of goods they now find they can't sell.For example, in the United States from 1876-79, the price level fell on average almost 5 percent per year while average output growth exceeded 7.6 percent.
Last edited by Zippyjuan; 11-26-2015 at 09:07 PM.
I didn't actually read it but it answered your question of are there any examples of deflation and economic growth. And the answer is yes.
And that is my whole point. The reason for deflation is what matters. If it is high productivity growth, then it is not problematic. If it is because of a collapse of credit then it is a problem.
Last edited by Krugminator2; 11-26-2015 at 09:09 PM.
Lol...I can see why you think the things you do.
And as I pointed out, they are rare events. Thanks for the link by the way!
I can look at the numbers and the circumstances and see what happened. I don't need Paul Krugman's interpretation of it.
Price deflation that wasn't caused by the busting of an inflationary bubble is a rare event in this country's history. Before the civil war you had national banks jerking around the economy, and afterwards you had the Industrial Revolution until they installed the Federal Reserve to be a constant source of monetary inflation.
Also from the Rothbard link:
It should be clear, then, that the “great depression” of the 1870s is merely a myth—a myth brought about by misinterpretation of the fact that prices in general fell sharply during the entire period.
Price inflation or deflation is not a criteria in determining a recession or depression. Consecutive quarters of GDP shrinking is.
http://www.investopedia.com/terms/r/recession.asp
Again the Rothbard piece:The technical indicator of a recession is two consecutive quarters of negative economic growth as measured by a country's gross domestic product (GDP);
As I noted earlier, most economist don't say deflation leads to recessions but that deflation follows from recessions. Contracting demand (the recession and the falling GDP) leading to falling prices. The prices are a lagging indicator.Friedman and Schwartz estimated that prices in general fell from 1869 to 1879 by 3.8 percent per annum. Unfortunately, most historians and economists are conditioned to believe that steadily and sharply falling prices must result in depression: hence their amazement at the obvious prosperity and economic growth during this era.
Last edited by Zippyjuan; 11-26-2015 at 09:25 PM.
Yes, well they didn't start calculating GDP until 1929. So if you can't come to a conclusion from any other data then I guess you have no idea if there were any recessions before then.
Why should I care about how low the price of silver goes? It's not like I'm planning on selling any of it in the near future.
I guess that means you cannot say for certain that the economy was growing in the 1800's then.
GDP isn't any more significant than any other number. It is just what you base your definitions off of. Real national product grew in the 1870s. Real national product per capita did. Several other numbers did. The only number that didn't was the price level.
Ah- so there WAS a way they were measuring GDP. Note- they also didn't track the inflation rate back then either. How do you know prices actually declined?
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