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We do know that it was because of macroeconomic guidance. The money supply contracted sharply because of the collapse of the banking system in 1930-31, and the

We do know that it was because of macroeconomic guidance. The money supply contracted sharply because of the collapse of the banking system in 1930-31, and the gold standard was too inflexible to allow rapidly expanding the money supply. The economic contraction for each country right around when the country went off the gold standard. In 2008, governments prevented the banking system from collapsing, and were able to rapidly expand the money supply because there's no gold standard. The US was the epicenter of the crisis, but recovered faster than Europe because it was more aggressive. In 2020, the response was even more aggressive, and the recovery faster. The US hasn't pursued the ideal policy, but the policy it has pursued has made recessions shorter than they would be, otherwise. If anything, the lesson of 2020 is that governments should follow the advice of macroeconomists more than they already do.

dnautics 6y ago
> The economic contraction for each country right around when the country went off the gold standard. Classic case of correlation != causation. Also, it's very selective memory. Why did you not include the data point of 1920/1921 contraction where they did not go off the gold standard and the economy snapped back? In relative terms, the contraction bottomed out worse than the '29 contraction. This "recovered faster" talk is all insane. All of the metrics you are using are basically metrics that apply to the top maybe 10% of income earners. The only metric that maybe applies to the rest of us is "employment", but who can know anymore, as the real returns to labor have been totally distorted, and in a lot of ways employment numbers are measured in a funny fashion (we don't count people not seeking work). The rest of the population is not necessarily doing as great. > the lesson of 2020 is that governments should follow the advice of macroeconomists more than they already do. Don't forget the lesson of King Edward II, who was discovered to have debased the currency and funnelled the funds to political cronies (mostly Hugh Despenser). Who knows if the account of the exact method of his death were true, but what is true is that the people got so angry at the real returns to their income that they triggered a civil war to depose him.
- QuesnayJr 6y ago
  There were lots of recessions where they didn't go off the gold standard. The contraction in 1929-1933 was so large, that going off the gold standard was the simplest option. Unemployment responds to increases of the money supply. This pattern is quite visible in the macroeconomic data we have. Also, "employment" includes everyone who has a job, so there's nothing funny about the metric. "Unemployment" requires some restriction, because there are people who have no plans to enter the work force in the near future, such as college students, the retired, or the fraction of spouses that plan on staying home. If you don't like the definition the media reports, there's a whole spectrum of alternate measures that the BLS computes that you are welcome to look at, instead. Over short time intervals they tend to march up and down together. I may have forgotten the lesson of King Edward II, but I remember the lesson of the Great Depression, which caused Adolf Hitler to come to power. He took Germany off the gold standard, and engaged in large fiscal stimulus, albeit for the grim purpose of conquering Europe. I also remember that Karl Marx predicted that the internal contradictions of capitalism meant that it was doomed, and how those claims looked like they were being vindicated in the 1930s, because macroeconomic stimulus was applied so late.

dnautics 6y ago

> The economic contraction for each country right around when the country went off the gold standard. Classic case of correlation != causation. Also, it's very selective memory. Why did you not include the data point of 1920/1921 contraction where they did not go off the gold standard and the economy snapped back? In relative terms, the contraction bottomed out worse than the '29 contraction. This "recovered faster" talk is all insane. All of the metrics you are using are basically metrics that apply to the top maybe 10% of income earners. The only metric that maybe applies to the rest of us is "employment", but who can know anymore, as the real returns to labor have been totally distorted, and in a lot of ways employment numbers are measured in a funny fashion (we don't count people not seeking work). The rest of the population is not necessarily doing as great. > the lesson of 2020 is that governments should follow the advice of macroeconomists more than they already do. Don't forget the lesson of King Edward II, who was discovered to have debased the currency and funnelled the funds to political cronies (mostly Hugh Despenser). Who knows if the account of the exact method of his death were true, but what is true is that the people got so angry at the real returns to their income that they triggered a civil war to depose him.

QuesnayJr 6y ago
There were lots of recessions where they didn't go off the gold standard. The contraction in 1929-1933 was so large, that going off the gold standard was the simplest option. Unemployment responds to increases of the money supply. This pattern is quite visible in the macroeconomic data we have. Also, "employment" includes everyone who has a job, so there's nothing funny about the metric. "Unemployment" requires some restriction, because there are people who have no plans to enter the work force in the near future, such as college students, the retired, or the fraction of spouses that plan on staying home. If you don't like the definition the media reports, there's a whole spectrum of alternate measures that the BLS computes that you are welcome to look at, instead. Over short time intervals they tend to march up and down together. I may have forgotten the lesson of King Edward II, but I remember the lesson of the Great Depression, which caused Adolf Hitler to come to power. He took Germany off the gold standard, and engaged in large fiscal stimulus, albeit for the grim purpose of conquering Europe. I also remember that Karl Marx predicted that the internal contradictions of capitalism meant that it was doomed, and how those claims looked like they were being vindicated in the 1930s, because macroeconomic stimulus was applied so late.