money (please explain) - Page 10 - Politics and Economics

SimonStylesTheActo · 02-05-2012, 03:07 PM

I am having a hard time understanding where you are coming from, perhaps you could recommend some articles or books that explain your view in more detail?

SimonStylesTheActo · 02-05-2012, 03:09 PM

Quote:

A predictably modest level of inflation is actually desirable.

I disagree. Any supply of money is 'enough'. Inflation discourages savings, transfers wealth from those who are not politically connceted to those who are and transfers wealth from creditors to debtors (stealing is bad). A predictably modest level of inflation may be more desirable than some outcomes but it is certainly not as desirable as the deflation that would result from sound money.

maxtower · 02-05-2012, 03:45 PM

Quote:

Originally Posted by SimonStylesTheActo

I am having a hard time understanding where you are coming from, perhaps you could recommend some articles or books that explain your view in more detail?

Read Scott Sumner's blog. http://www.themoneyillusion.com/

He has quite a few posts about the gold standard and the great depression. He is not a keynesian.

SimonStylesTheActo · 02-05-2012, 04:52 PM

yah more stimulus that's what the economy needs... fing retards

bert stein · 02-05-2012, 05:36 PM

Quote:

Originally Posted by Semtex

That's not to say that the depression wouldn't have gone on forever in those countries if they would have stubbornly stuck to the peg. These are the dynamics of fixed exchange rates. If the market wants you to devalue its usually retarded to fight it. There's a subtle irony about advocating for the gold standard because you believe in the markets over government intervention, because during the Great Depression it was those countries who ignored the markets and used government intervention to defend the standard that suffered the most.

I studied pretty much this exact issue for a monetary policy class back in the day. Two seminal papers, that have the data and information on some of the specific countries, are this one by Barry Eichengreen and Jeffrey Sachs, and this one by Ehsan Choudhri and Levis Kochin. The data shows a high correlation between the length of time one stayed with the gold standard and both the magnitude and duration of depression.

I completely agree. My point is that Murphy's logic (in the nonsense article that SimonStyles posted) would predict that you wouldn't see a _covariance_ between the length of time a country stayed with the gold standard and the duration of depression of greater than one; i.e. whereby the later one stayed in the gold standard, the longer one would suffer even after going off the standard. But we see a covariance that is approximately one, whereby the length of time countries suffer _after_ going off the gold standard is independent of the date at which they go off the standard, which implies that the prisoner's dilemma logic in Murphy's article fails.

bert stein · 02-05-2012, 06:21 PM

Quote:

Originally Posted by bert stein

I completely agree. My point is that Murphy's logic (in the nonsense article that SimonStyles posted) would predict that you would see a _covariance_ between the length of time a country stayed with the gold standard and the duration of depression of greater than one; i.e. whereby the later one stayed in the gold standard, the longer one would suffer even after going off the standard. But we see a covariance that is approximately one, whereby the length of time countries suffer _after_ going off the gold standard is independent of the date at which they go off the standard, which implies that the prisoner's dilemma logic in Murphy's article fails.

FMP

NeBlis · 02-05-2012, 11:08 PM

Quote:

Originally Posted by Semtex

This and there are a couple others. I've always been curious as to what proponents of the gold standard think of it's role in exacerbating the Great Depression. Do they honestly think the US should go back to it?

YOUGONNAGETRAPED.jpg

AlexM · 02-06-2012, 04:51 AM

STOP BUMPING ANCIENT THREADS!

Vael · 02-06-2012, 02:14 PM

Quote:

Originally Posted by bert stein

FMP

Why does a covariance of greater than one suggest positive correlation and a covariance of about one no correlation??

bert stein · 02-06-2012, 04:28 PM

Quote:

Originally Posted by Vael

Why does a covariance of greater than one suggest positive correlation and a covariance of about one no correlation??

I made a mistake in my characterization; I'm claiming that Cov(length of time in recession, date went off gold standard)/Var(date went off gold standard) = 1 in reality, while Murphy's story would predict Cov(length of time in recession, date went off gold standard)/Var(date went off gold standard) > 1. The interpretation is that a regression of (length of time in recession) on (date went off gold standard) would have a coefficient of approximately one, whereas Murphy's model would predict a regression coefficient of greater than one.

In any case, in both cases, the correlation is non-zero (and in fact may equal unity); remember that I'm comparing the covariance of (length of time in recession, date went off gold standard), not (length of time in recession _after_ going off gold standard, date went off gold standard); the latter indeed approximates zero (in reality, not in Murphy's story).

Yes, I was being more confusing than I should have been.