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Upvoted the OP in order to call attention to what I consider primarily a propaganda piece by the Bloomberg new service. There was nothing secret about the execu

Upvoted the OP in order to call attention to what I consider primarily a propaganda piece by the Bloomberg new service. There was nothing secret about the executive order http://en.wikipedia.org/wiki/Executive_Order_6102 http://en.wikipedia.org/wiki/Executive_Order_6102 , except possibly that even the Wikipedia article does not explain in what manner Congress granted the President (actually the Secretary of the Treasury) such extraordinary power to confiscate property. That FDR used the Brer Rabbit strategy to call attention to his ending the gold standard only shows he was a skilled politician. > The recovery from the Great Depression began instantly with Roosevelt’s policy shift... I think most objective measures do not show recovery from the Great Depression until the ramp-up of arms production prior to American entry in WWII.

betterunix 14y ago
"extraordinary power to confiscate property" Confiscate property? Gold coins were to be traded for $20.67 per ounce, not simply taken. No confiscation occurred; the nation simply ended the practice of using gold currency by taking it out of circulation.
- sageikosa 14y ago
  I believe the idea is the "trade" was forced. Choice on when and how to dispose of one's property is what having property is all about.
- dreamdu5t 14y ago
  Forcing someone to sell you something isn't trade, it's theft. If I steal your TV, then give you $5, I still stole your TV. Confiscating people's property is the act of a despot.
  - rayiner 14y ago
    Compensated compensation is explicitly sanctioned in the Constitution.
    - bmmayer1 14y ago
      It explicitly mentions just compensation. A sub-market price isn't just.
      - rayiner 14y ago
        It was traded in at the fixed conversion rate between gold and U.S. dollars.
        notdrunkatall 14y ago
        A rate which was fixed by the buyer, with no protestation allowed by the seller.
        bmmayer1 14y ago
        Hear hear
  - Cushman 14y ago
    What if it's not a TV, but a human being? Just pointing out there are some concepts more sacred than property.
    - dreamdu5t 14y ago
      Please explain how confiscating people's gold was necessary to save someone's life. How is the life of the person stealing worth more than the person he is stealing from?
      - Cushman 14y ago
        I think that's a red herring. First, slavery is not death and removing someone from slavery is not saving their life. Second, if it could be proven (though I doubt anyone has the means) that confiscation of gold sped economic recovery significantly, being responsible for many millions of lives saved in the past seventy years, would you accept it was the right thing to do? I suspect your answer is "no", and if so I wonder if you have any idea why.
  - enraged_camel 14y ago
    >>Forcing someone to sell you something isn't trade, it's theft. [citation needed]
- letney 14y ago
  From the Wikipedia article: "The price of gold from the Treasury for international transactions was thereafter raised to $35 an ounce ($587 in 2010 dollars) resulting in an immediate loss for everyone who had been forced to surrender their gold." That is theft, plain and simple.
  - rayiner 14y ago
    It would've been theft if the conversion rate was raised before the confiscation but people were paid out at a lower rate.
rdl 14y ago
Kind of odd at Bloomberg, which used to be relatively impartial and accurate, has been becoming more and more partisan recently.
- protomyth 14y ago
  Given its founder's actions as mayor, it would seem to fit with their current trend and this article. Looking for historical precedents from respected[1] historical figures is a time honored tradition. 1) please note, I did not say universally respected - for another example, look at your $20 bill and ask what some Americans think of the person pictured
- hudibras 14y ago
  http://en.wikipedia.org/wiki/Opinion_piece http://en.wikipedia.org/wiki/Opinion_piece An opinion piece is an article, published in a newspaper or magazine, that mainly reflects the author's opinion about the subject. Opinion pieces are featured in many periodicals.
  - rdl 14y ago
    EDIT: I saw it was "economic history"; I didn't realize "bloomberg view" was the opinion section, vs. just bloomberg; too many levels of nesting.
- rayiner 14y ago
  Bloomberg is responding to market forces. In New York, most people read the WSJ for financial news, but ever since Murdock bought the paper it's been trending right. But Wall Street folks really don't lean right that strongly (e.g. Jamie Dimon and Lloyd Blankfein are both registered Democrats), especially the rank-and-file. That leaves a market opening for Bloomberg if they shift to the left. E.g. Bloomberg Businessweek ran a piece a couple of months ago on Wal-Mart that was extremely sympathetic to union interests. That kind of stuff really resonates with a lot of people you wouldn't think it would resonate with. Indeed, an article like this is entirely consistent with that angle. Without getting into the merits of the gold standard, it is hard to dispute that the banking sector has a greater status in a country with a "managed currency" than they do in a country on the gold standard. You're not going to find a lot of Wall Street types who yearn for a return to the gold standard...
shn 14y ago
Sometimes secretly means that enough critical mass does not know about something, or it is not discussed in depth to reveal what it means. Forbidding of physical gold ownership could not be secret, could it? since they're calling everyone to bring their gold in. But its repercussion was not immediately obvious. Let's no forget it's 1933s, there's no twitter nor blogs. Leaving gold standard is one of the big controversies for any nation as it allows governments to inflate the supply of the money and deflate its value. Essentially that's what happened eventually. Inflation is a silent tax on the citizens.
- trevelyan 14y ago
  Despite what you may have been told by others or simply be assuming because of your political convictions, there was no significant inflation in the United States in the 1930s. The decade was in fact characterized by overall deflation, with prices lower at the end of the decade than they were at the start. Abandoning the gold standard was a crucial and positive factor in stopping deflation during a time when it was wreaking wholesale and unprecedented destruction on the American and global economy. The move was entirely necessary, and did not lead to inflation as you can hopefully see from the actual historical data: http://www.usinflationcalculator.com/inflation/historical-inflation-rates/ http://www.usinflationcalculator.com/inflation/historical-in... The federal budget did turn expansionary (until 1937 when Roosevelt slowed spending in the face of evidence suggesting a mild recovery was underway), but the overall increase in federal spending under the New Deal was offset by shrinking state budgets and a series of bank failures across the interior which shrank the money supply. Look at the E. Cary Brown essay "Fiscal Policy in the Thirties" for the aggregate budget stats across the entire United States. Or just look at the inflation stats -- are they consistent with a story of unfettered government spending?
  - shn 14y ago
    I am not sure I understand you correctly. Abandoning gold standard is one thing, abusing money after abandoning gold standard is another. When governments need money they can create it out of thin air, and leaving a standard that you can not control gives you this ability. Check the following web site. http://www.paulvaneeden.com/What.is.money http://www.paulvaneeden.com/What.is.money The link you provided (http://www.usinflationcalculator.com/ http://www.usinflationcalculator.com/) calculated me the following: an item worth $20 in 1933 would cost $469.02 in 2013 and cumulative rate of inflation is 2245.1%. How is that not an inflation?
trevelyan 14y ago
Barry Eichengreen's excellent book "Golden Fetters" actually demonstrates very convincingly using cross-national time series analysis that economic recovery across the world began on average around six months after countries left the gold standard. This is now the mainstream understanding of the Great Depression in economic history. His sample size is something like 30-35 countries, and shows clearly that countries which stayed on the gold standard longer suffered more deflation and higher unemployment than their counterparts who abandoned it early. So Bloomberg is in fact correct on this point. And it may also be worth noting that the observed changes are about as instantaneous as you get in economic policy, given that even today changes to the Fed rate are assumed to hit the economy with a six-month lag.
- dreamdu5t 14y ago
  His paper shows that countries who held onto the gold standard longer were more likely to adopt protectionist policies. It wasn't abandoning the gold standard that allowed for recovery, but the protectionist policies that went with it.
  - trevelyan 14y ago
    It is a really thick book not a paper. And while it doesn't hypothesize about protectionism as far as I remember, if you really want to argue that the gold standard forced countries to embrace destructive trade policies in a statistically-significant way, you are not doing its advocates any favors. Realistically, Eichengreen's argument is considered so solid these days that even fringe nutjobs with an anti-FDR or anti-Keynes agenda don't tackle it straight on. Instead, the typical plan is to insinuate that fiscal stimulus doesn't work because the US did not achieve full recovery before WWII. Of course, anyone who has taken even an undergraduate course in US economic history should know that fiscal contractions on the state-level throughout the mid-1930s basically offset expansionary fiscal policy on the federal level (the seminal paper is E. Cary Brown's "Fiscal Policy in the Thirties" [1956]). This is why no-one in mainstream economics believes fiscal policy was truly expansionary in the US during the 1930s. That said, if you're asking why this is relevant that is a good point, since the important thing about leaving the gold standard is not that it led to immediate INFLATION so much as that it stopped DEFLATION and began the slow process of recovery. And this is the observation made by the piece and it is absolutely correct: once the United States left the gold standard the country's near double-digit annual deflation stopped and its process of recovery - however slow and faltering - began.
jackfoxy 14y ago
Whoops...overlooked that this was an opinion piece (tries to extract foot from mouth)

betterunix 14y ago

"extraordinary power to confiscate property" Confiscate property? Gold coins were to be traded for $20.67 per ounce, not simply taken. No confiscation occurred; the nation simply ended the practice of using gold currency by taking it out of circulation.

sageikosa 14y ago
I believe the idea is the "trade" was forced. Choice on when and how to dispose of one's property is what having property is all about.
dreamdu5t 14y ago
Forcing someone to sell you something isn't trade, it's theft. If I steal your TV, then give you $5, I still stole your TV. Confiscating people's property is the act of a despot.
- rayiner 14y ago
  Compensated compensation is explicitly sanctioned in the Constitution.
  - bmmayer1 14y ago
    It explicitly mentions just compensation. A sub-market price isn't just.
    - rayiner 14y ago
      It was traded in at the fixed conversion rate between gold and U.S. dollars.
      - notdrunkatall 14y ago
        A rate which was fixed by the buyer, with no protestation allowed by the seller.
        bmmayer1 14y ago
        Hear hear
- Cushman 14y ago
  What if it's not a TV, but a human being? Just pointing out there are some concepts more sacred than property.
  - dreamdu5t 14y ago
    Please explain how confiscating people's gold was necessary to save someone's life. How is the life of the person stealing worth more than the person he is stealing from?
    - Cushman 14y ago
      I think that's a red herring. First, slavery is not death and removing someone from slavery is not saving their life. Second, if it could be proven (though I doubt anyone has the means) that confiscation of gold sped economic recovery significantly, being responsible for many millions of lives saved in the past seventy years, would you accept it was the right thing to do? I suspect your answer is "no", and if so I wonder if you have any idea why.
- enraged_camel 14y ago
  >>Forcing someone to sell you something isn't trade, it's theft. [citation needed]
letney 14y ago
From the Wikipedia article: "The price of gold from the Treasury for international transactions was thereafter raised to $35 an ounce ($587 in 2010 dollars) resulting in an immediate loss for everyone who had been forced to surrender their gold." That is theft, plain and simple.
- rayiner 14y ago
  It would've been theft if the conversion rate was raised before the confiscation but people were paid out at a lower rate.

rdl 14y ago

Kind of odd at Bloomberg, which used to be relatively impartial and accurate, has been becoming more and more partisan recently.

protomyth 14y ago
Given its founder's actions as mayor, it would seem to fit with their current trend and this article. Looking for historical precedents from respected[1] historical figures is a time honored tradition. 1) please note, I did not say universally respected - for another example, look at your $20 bill and ask what some Americans think of the person pictured
hudibras 14y ago
http://en.wikipedia.org/wiki/Opinion_piece http://en.wikipedia.org/wiki/Opinion_piece An opinion piece is an article, published in a newspaper or magazine, that mainly reflects the author's opinion about the subject. Opinion pieces are featured in many periodicals.
- rdl 14y ago
  EDIT: I saw it was "economic history"; I didn't realize "bloomberg view" was the opinion section, vs. just bloomberg; too many levels of nesting.
rayiner 14y ago
Bloomberg is responding to market forces. In New York, most people read the WSJ for financial news, but ever since Murdock bought the paper it's been trending right. But Wall Street folks really don't lean right that strongly (e.g. Jamie Dimon and Lloyd Blankfein are both registered Democrats), especially the rank-and-file. That leaves a market opening for Bloomberg if they shift to the left. E.g. Bloomberg Businessweek ran a piece a couple of months ago on Wal-Mart that was extremely sympathetic to union interests. That kind of stuff really resonates with a lot of people you wouldn't think it would resonate with. Indeed, an article like this is entirely consistent with that angle. Without getting into the merits of the gold standard, it is hard to dispute that the banking sector has a greater status in a country with a "managed currency" than they do in a country on the gold standard. You're not going to find a lot of Wall Street types who yearn for a return to the gold standard...

shn 14y ago

Sometimes secretly means that enough critical mass does not know about something, or it is not discussed in depth to reveal what it means. Forbidding of physical gold ownership could not be secret, could it? since they're calling everyone to bring their gold in. But its repercussion was not immediately obvious. Let's no forget it's 1933s, there's no twitter nor blogs. Leaving gold standard is one of the big controversies for any nation as it allows governments to inflate the supply of the money and deflate its value. Essentially that's what happened eventually. Inflation is a silent tax on the citizens.

trevelyan 14y ago
Despite what you may have been told by others or simply be assuming because of your political convictions, there was no significant inflation in the United States in the 1930s. The decade was in fact characterized by overall deflation, with prices lower at the end of the decade than they were at the start. Abandoning the gold standard was a crucial and positive factor in stopping deflation during a time when it was wreaking wholesale and unprecedented destruction on the American and global economy. The move was entirely necessary, and did not lead to inflation as you can hopefully see from the actual historical data: http://www.usinflationcalculator.com/inflation/historical-inflation-rates/ http://www.usinflationcalculator.com/inflation/historical-in... The federal budget did turn expansionary (until 1937 when Roosevelt slowed spending in the face of evidence suggesting a mild recovery was underway), but the overall increase in federal spending under the New Deal was offset by shrinking state budgets and a series of bank failures across the interior which shrank the money supply. Look at the E. Cary Brown essay "Fiscal Policy in the Thirties" for the aggregate budget stats across the entire United States. Or just look at the inflation stats -- are they consistent with a story of unfettered government spending?
- shn 14y ago
  I am not sure I understand you correctly. Abandoning gold standard is one thing, abusing money after abandoning gold standard is another. When governments need money they can create it out of thin air, and leaving a standard that you can not control gives you this ability. Check the following web site. http://www.paulvaneeden.com/What.is.money http://www.paulvaneeden.com/What.is.money The link you provided (http://www.usinflationcalculator.com/ http://www.usinflationcalculator.com/) calculated me the following: an item worth $20 in 1933 would cost $469.02 in 2013 and cumulative rate of inflation is 2245.1%. How is that not an inflation?

trevelyan 14y ago

Barry Eichengreen's excellent book "Golden Fetters" actually demonstrates very convincingly using cross-national time series analysis that economic recovery across the world began on average around six months after countries left the gold standard. This is now the mainstream understanding of the Great Depression in economic history. His sample size is something like 30-35 countries, and shows clearly that countries which stayed on the gold standard longer suffered more deflation and higher unemployment than their counterparts who abandoned it early. So Bloomberg is in fact correct on this point. And it may also be worth noting that the observed changes are about as instantaneous as you get in economic policy, given that even today changes to the Fed rate are assumed to hit the economy with a six-month lag.

dreamdu5t 14y ago
His paper shows that countries who held onto the gold standard longer were more likely to adopt protectionist policies. It wasn't abandoning the gold standard that allowed for recovery, but the protectionist policies that went with it.
- trevelyan 14y ago
  It is a really thick book not a paper. And while it doesn't hypothesize about protectionism as far as I remember, if you really want to argue that the gold standard forced countries to embrace destructive trade policies in a statistically-significant way, you are not doing its advocates any favors. Realistically, Eichengreen's argument is considered so solid these days that even fringe nutjobs with an anti-FDR or anti-Keynes agenda don't tackle it straight on. Instead, the typical plan is to insinuate that fiscal stimulus doesn't work because the US did not achieve full recovery before WWII. Of course, anyone who has taken even an undergraduate course in US economic history should know that fiscal contractions on the state-level throughout the mid-1930s basically offset expansionary fiscal policy on the federal level (the seminal paper is E. Cary Brown's "Fiscal Policy in the Thirties" [1956]). This is why no-one in mainstream economics believes fiscal policy was truly expansionary in the US during the 1930s. That said, if you're asking why this is relevant that is a good point, since the important thing about leaving the gold standard is not that it led to immediate INFLATION so much as that it stopped DEFLATION and began the slow process of recovery. And this is the observation made by the piece and it is absolutely correct: once the United States left the gold standard the country's near double-digit annual deflation stopped and its process of recovery - however slow and faltering - began.

jackfoxy 14y ago

Whoops...overlooked that this was an opinion piece (tries to extract foot from mouth)