Comments (42)

• greg

  The Great Depression came about not because of poor monetary policies and excessive government spending, it developed from a lack of productivity increases.

  During the 30's, the world was building for war. Government and private investments were directed towards building the tools of war, these tools were the farthest from productivity investments you can get. In fact, these were tools of distruction. So productivity came to a halt and without these advances, there was no offset to excessive government spending.

  While today we have engaged in a war on terrorism, it is nowhere near the magintude of WWII. And while government spending has gotten out of hand, we are still seeing huge technological advances every day. And that is why I don't see us falling into the depths of a huge depression.

  On the topic of business cycles, monitary policy is not the only cause! Really, the world is much more complex than that. Look to the past and you will see our economy evolving to fewer recessions and longer periods of economic expansion. Technological advances is one of the key reasons for this economic expansion.

  Ask youself, are you better off today than your grandfather was when he was your age?

  Published: June 16, 2009 8:37 AM

• Chris

  Great timing for this book.

  Many in today's generation are looking to the same failed solutions from Obama as were enacted by Hoover and FDR.

  Can you blame them? After all, they learn the myths in government schools.

  It's always refreshing to see a book that dispels those myths.

  Published: June 16, 2009 9:10 AM

• ShedPlant

  greg,

  It is not the Austrian position that, without monetary intervention, there would be no economic growth of any kind. That's an absurd misunderstanding of Austrian business cycle theory.

  Rather, monetary expansion bids away resources that might otherwise be used for economic growth and squanders them on unsustainable projects.

  As for the 1930s, yes, military expenditure was a huge destroyer of wealth and people, but Murphy's book examines many other government policies that prevented market recovery.

  Published: June 16, 2009 10:10 AM

• ShedPlant

  Also, I did enjoy Murphy's book. Thanks and well done :) !

  Published: June 16, 2009 10:12 AM

• newson

  "Ask youself, are you better off today than your grandfather was when he was your age?"

  could you rest easy, knowing your children will grow up to greater wealth than you?

  Published: June 16, 2009 10:26 AM

• fundamentalist

  greg: "On the topic of business cycles, monitary policy is not the only cause"

  Hayek refutes all of the theories of business cycles that compete with the monetary theory in "Monetary Theory and Trade Cycle" available in pdf on this site.

  Published: June 16, 2009 11:17 AM

• Joel Parkes

  Time will tell us both if what Obama is doing will work. He certainly is attempting something of unprecedented scale. I hope he succeeds. By the way, I also hoped Bush would succeed, because I always want my country to succeed. Any further arguments about the Austrian School are pointless, as its theories are untested and not in practice. They are theories, and nothing more.

  Nor will you change my mind about the New Deal. I don't believe that it was a failure, in spite of this site's best efforts to convince me. But then again, you are libertarians, so you are most likely going to believe it failed. I am a liberal, so I'm going to most likely believe it succeeded. In this I was certainly influenced by my parents, both of whom lived through it and benefited from it.

  Published: June 16, 2009 11:46 AM

• ShedPlant

  @Joel Parks Country != Government

  It is obviously true that perfect reproducible experiments cannot be carried out in the social sciences.

  However, it just isn't good enough to imply that social sciences are wholly divorced from reality. To imply that two contradictory points of view are equally valid (e.g. Libertarians believe government make-work programmes destroy wealth, liberals believe it creates wealth) is silly.

  In the absence of perfect experimental conditions, Murphy does the best that is possible, which is draw historical comparisons and argue deductively. I thought the book was convincing. Your task, as a critic, is to find fault with the historical evidence or economic reasoning. You can't dismiss it out of hand as mere theory - what, after all, guides the Hoover-FDR-Bush-Obama economic policies if not a theory?

  Incidentally, no one would argue that the New Deal benefitted noone. Indeed, a whole minority class benefitted from government largess. What Murphy argues, again, I think, convincingly, is that the New Deal failed to create an economic recovery.

  Published: June 16, 2009 12:02 PM

• low warranty

  Joel parkes, It may comfort you to know that your parents were 'helped' by the new deal. But what about the people that were hurt by it? For instance, the people who had their gold confiscated? Or the people who struggled to put food on the table while the new deal was paying farmers to destroy crops and farm animals? Or the people who had their land confiscated in order to build a dam?
  

  Published: June 16, 2009 12:40 PM

• Michael A. Clem

  The Great Depression came about not because of poor monetary policies and excessive government spending, it developed from a lack of productivity increases.
  
  And what caused the lack of productivity increases? It wasn't that the world was gearing for war--The U.S. certainly wasn't, and most Americans really didn't want to enter WWII until Pearl Harbor.
  
  While everyone wants to talk about the Great Depression and its causes, nobody wants to look at the Roaring '20s, as if such a growing economy was merely natural--it wasn't. It was an unprecedented and unnatural growth spurred on by government policies and yes, by the Fed, at that point still relatively new in its money-tampering policies. The late 20s were the boom that led to the bust of the 30s.
  
  Anybody wants to believe in the value of the New Deal or explain the Great Depression needs to also explain the Roaring 20s--as far as I know, nobody does or can explain it except for the Austrians and the ABCT.
  
  Why people go to such extraordinary lengths to defend a clearly flawed view of history, however PC it may be, is the real mystery.

  Published: June 16, 2009 1:04 PM

• ShedPlant

  @ Clem

  Part of the prosperity of the 20s may have been real; the federal government's fiscal policies were commendable, although the monetary policies were very harmful.

  Published: June 16, 2009 1:07 PM

• Dick Fox

  In another thread Robert Murphy wrote:

  there were very specific reasons that unemployment broke 25 percent in 1933, and we don't have those factors in place today. So I don't think the official unemployment rate will get anywhere near that catastrophic level, though it could very well come in at the #2 spot in US economic history.

  I posted this in another thread but I believe it also applies here. Murphy seems to have a misunderstanding of the current situation as it relates to wages. There is a very strong possibility that we will have unemployment as severe are during the Great Depression. While there has not been a sumit such as Hoover had to ask businessmen to artificially hold wage rates high the government is doing virtually the same thing.

  First evidence is the takeover of GM. "Government motors" will not reduce union wages but will use tax revenue or deficit spending (future taxes) to support wages. What is the difference between this and what Hoover did?

  Additionally congress is increasing unemployment benefits as unemployment increases. Once again wages remain high as workers go on unemployment but taxes or deficits (future taxes) are also keeping wage costs artificially high. Add to this the fact that the government intends to create "green" jobs with the result of destroying 2.2 jobs per "green" job and the situation gets worse.

  I believe that Murphy may be fooled by Keynesian bond illusion. If the Keynesians borrowed (bond illusion) to lower tax rates and then - as with the Kennedy/Johnson tax cut -) we could see increased production, but this is not what the the government is doing with its bond illusion. The bond illusion is being used almost directly to prop up wages.

  If the President, Congress, and the FED do as they are promising we could actually have higher unemployment than during the Great Depression.

  Published: June 16, 2009 1:20 PM

• Dick Fox

  greg,

  You need to go back and review your history of military preparation before WWII. Yes, Roosevelt did begin to prepare for war, but Hoover never did. The worst part of the Great Depression came in 1933 long before our nation began to become a war machine. Your basic premise is wrong and so your whole analysis falls apart.

  Published: June 16, 2009 1:27 PM

• Dick Fox

  Joel Parkes,

  I simply do not believe your mind is as closed as you pretend or you would never have visited this site. So let me encourage you to throw away ideology and start from the ground up. Think about the fundamentals of economics and then begin to read. Read Keynes to see what is driving Democrat rhetoric. Read Friedman to see what is driving Democrat policy. Read Mises to see what is the foundation of Austrian economics and the Austrian Business Cycle Theory. Read Jude Wanniski's The Way the World Works to discover what supply side theory is all about. Then come back and let's talk.

  Published: June 16, 2009 1:34 PM

• Dick Fox

  fundamentalist,

  Thanks for pointing me to Hayek's Monetary Theory and Trade Cycle. In my browsing I had not come across it. It is next up on my reading list.

  I am interested in your take on the cause of the Great Depression. Do you agree with Rothbard?

  I do not buy Rothbard's analysis. I believe the GD was primarily caused by policy errors. I will go into detail if anyone wishes but I would like to read your take.

  Thanks.

  Published: June 16, 2009 1:38 PM

• fundamentalist

  Dick, Yes I agree with Rothbard. But I think Rothbard would also agree that policy errors made the problem worse than it would have been, probably turning a normal depression into the Great D. Monetary policy was the catalyst while fiscal policy errors amplified the effects of monetary policy.

  Published: June 16, 2009 1:52 PM

• fundamentalist

  Joel Parks: "Nor will you change my mind about the New Deal."

  I don't think anyone disagrees that the New Deal helped some. It helped a lot of unemployed people. It just didn't do what mainstream economists and history books say it did--save us from the Great Depression. While helping a lot of people, the New Deal did more harm than good and almost turned the US into a Marxist state.

  If the US economy recovers in the near future, Obama will get all of the credit, but he won't deserve it. History teaches that economies have robust internal mechanisms that cause recovery spontaneously. Before the Great D, the US recovered in a short time from every one of about two dozen depressions with no state stimuli or bail outs at all. At the same time, sound economics teaches that stimuli and bail outs do more harm than good. So the credit for any recovery should go to the power of the free market. Instead, the president will get the credit even though the economy recovered in spite of his policies.

  Published: June 16, 2009 2:00 PM

• Steven

  @ fundamentalist

  Very well put.

  Published: June 16, 2009 2:58 PM

• Dick Fox

  fundamentalist,

  Rothbard essentially takes a monetarist view of the Great Depression but his evidence is very weak. Friedman admits that he can see no monetary reason that the 1920 should have been a boom. Rothbard expands Friedman's definition of money in an effort to justify his monetarist view.

  The cause of the crash and the initial decline in the economy was international trade. Trade policy all through the 1920s prevented the nations of the world from paying their debts through exports so they resorted to debt.

  When it became evident that Hoover was pushing Smoot-Hawley and that it would be an across the board tariff rather than just agriculture traders pulled out of the markets. October 1929 was the end of a cycle that actually began a year earlier and played out all through 1929.

  After the crash in October 1929 the market actually recovered, but when Smoot was actually signed in the summer of 1930 world trade fell apart and the debt-ridden nations of the world had nowhere to go.

  You couple this with Hoovers horrible wage, price and tax policies and you have a great depression.

  None of this was because of monetary policy except when countries began to default on the gold standard.

  
  

  Published: June 16, 2009 4:07 PM

• Jim

  One question: has Mr. Murphy sent a copy of his thesis - that Friedman was wrong -to Friedman's co-author, Anna Schwartz, for her comments?

  Published: June 16, 2009 5:13 PM

• Jim

  One question: has Mr. Murphy sent a copy of his thesis - that Friedman was wrong -to Friedman's co-author, Anna Schwartz, for her comments?

  Published: June 16, 2009 5:38 PM

• alan

  Dick Fox,

  I'm sorry but I don't quite understand your take on the Great D. Can you elaborate more on your views, and perhaps point to some resources?

  Published: June 16, 2009 8:22 PM

• alan

  Also, as an aside - under a gold standard, wouldn't an influx of gold contribute to inflationary pressures? I think that was the case with most of the European nations during the Bretton Woods era, when they were absorbing American gold and dollars due to loose monetary policy by the Fed.

  Published: June 16, 2009 8:26 PM

• RWW

  Joel Parkes:

  Time will tell us both if what Obama is doing will work.

  That's like saying "Time will tell whether 2 + 2 will ever equal 4," or "Time will tell whether this definite integral will ever have a different value." The laws of so-called Austrian Economics no more open to debate than the theorems of mathematics.

  
  I hope he succeeds. By the way, I also hoped Bush would succeed, because I always want my country to succeed.

  That's the sort of unthinking nationalism that now masquerades as patriotism.

  
  Any further arguments about the Austrian School are pointless, as its theories are untested and not in practice.

  First, again, the theories of the Austrian School have been proved, a priori, in the same manner that the theorems of mathematics have been. Second, as if it matters, they have also been proved empirically by the coming depression, predicted by Austrian economists and none other.

  
  They are theories, and nothing more.

  Really, "theorems" or "laws" would be better terms

  
  Nor will you change my mind about the New Deal.

  Plain, unabashed, close-minded ignorance.

  Published: June 16, 2009 8:29 PM

• RWW

  That should be "whether 2 + 2 will ever NOT equal 4," but I guess it makes some sense either way.

  Published: June 16, 2009 8:50 PM

• Gil

  At least no one resorted to the '1921 economic oopsy' after all, the 1987 crash did not occur during a laissez-faire era yet it didn't trigger a great depression either. Anyway the standard view of the crash tends to talk of the U.S. stock market and how people were making money through trading shares than any production per se. One caveat seem to be most refer to the "roaring '20s" as only occurring in a few sectors of the U.S. economy but not most of it and the "emerging middle class" was actually a minority of people. Most people in most countries may have did okay during the '20s but few were actually 'roaring'. Not to mention most books agree that the erection of trade barriers across different countries was a really bad thing.

  Perhaps the unthinkable question is: did anyone's standards of living actually drop (excluding the drop that occurs with unemployment)? Suppose the same thing happened in 1830, if people were mass unemployed would there have mass lines of people at soup kitchens or would they have starved because there's no way people in the 1830's had the technology to mass produce food for a great deal of people who are doing nothing in return. If there's any historical truth to the standard of living in the 1930's as depicted some twenty or so years in The Untouchables then an American's standard of living was rather quite high during the depression and exceeded most of the world (and even parts of it today). So the Great Depression was bad but it was nowhere near the "end of Western Civilisation as we knew it".

  Published: June 16, 2009 9:43 PM

• newson

  dick fox's contention is rebutted convincingly by salerno in this podcast. friedman was wrong and rothbard right.

  http://mises.org/multimedia/mp3/Salerno/9.mp3

  Published: June 17, 2009 3:58 AM

• Dick Fox

  alan,

  Thanks for the question and interest.

  The answer to your question would be a very large book. Let me explain. You can get a good understanding of what set up the 1929 crash from Garet Garrett's "The Bubble That Broke The World." (178 pages)
  http://mises.org/books/bubbleworld.pdf

  In this book Garrett describes how world debt went out of control in th 1920s setting up the fall in 1929-30.

  Also reading Benjamin Anderson's fantastic book on the period "Economics and the Public Welfare" http://mises.org/store/Product.aspx?ProductId=197 to see how international trade policy prevented the nations of the world from producing and exporting forcing them to pay their debt to the United States with more debt (sound familiar).

  I don't have a specific book but you should also consider how Benjamin Strong with the New York FED worked with Montagu Norman during the 1920s to use monetary policy to protect London gold rather than the UK allowing their monetary system to adjust. This http://mises.org/daily/754 article will give you some background.

  Finally, is the series of events that drove the stock market during late 1928 and 1929 as congress debated Smoot-Hawley. The best detail on this is in Jude Wanniski's book "The Way the World Works." http://www.amazon.com/World-Works-Anniversary-Gateway-Contemporary/dp/0895263440 He gives the New York Times headlines and articles and the stock market prices as Smoot-Hawley was debated, up to the crash and then through 1930 until it was signed and the world fell apart.

  Concerning this one of the biggest errors FDR made was to torpedo trade talks early in his first term choosing instead to follow the monetarist ideas of Irving Fisher and inflate us out of the Depression. The result was utter failure just as all such attempts (1970s and today) have been failures. Monetarism does not work.

  I hope this helps. Sorry I don't have time to write more and be more specific.

  Published: June 17, 2009 9:24 AM

• Larry N. Martin

  Time will tell us both if what Obama is doing will work. He certainly is attempting something of unprecedented scale.
  
  The scale may be unprecedented, but the actual policies he is using are the same failed policies of the past. Why should the results be anything but a more spectacular failure, simply because he's doing them on a larger scale?

  Published: June 17, 2009 11:01 AM

• Dick Fox

  newson,

  Thanks for the mp3 reference. It has been a while since I listened to it so I took the time to listen to it again.

  Salerno does a great job of showing why Friedman was wrong in his conclusion that the Great Depression was caused by deflation. As Rothbard and Salerno point out the decline in the money supply in the early 1930s was because people pulled their money out of the system and the FED was properly reacting to the gold standard.

  But just as Friedman was wrong about the deflation of the early 1930s Rothbard was wrong about the inflation in the 1920s. Salerno does not defend this claim by Rothbard and even admits that he pointed out to Rothbard that his definition of the money supply was too broad though Salerno believes it is not significant.

  But the bottom line is that Rothbard does not make the case for inflation causing the crash of 1929 and they his argument against the monetarists argues successfully against a deflationary bust.

  Because we were on the gold standard during this time the monetary constraints were such that the monetary authorities could not create the same inflation and deflation disasters that we see since 1971 when Nixon took us off of the gold standard.

  The reason for the crash of 1929 was the international trade condition and significantly Smoot-Hawley. The reason for the continuation of the Great Depression and double digit unemployment for over a decade was horrible government policy both fiscal and monetary.

  Published: June 17, 2009 4:25 PM

• Dick Fox

  alan,

  Sorry, I mised your second question until just now.

  An influx of gold can create inflation but the supply of gold is so large that it takes a huge shift of gold to make any significant change. During the 1920s gold was flowing into the US so there was some inflation caused by gold but the FED was also controlling the money supply so currency adjustments kept it from becoming chronic. Inflation during the 1920s was virtually non-existent, certainly not enough to create a boom/crack up bust. Compared to the inflation since 1971 it was nothing.

  I think the biggest problem with Bretton Woods was that the US ignored the gold signals, as gold was flowing out of the US, and continued to issue dollars. The inflation of this period was not a gold issue but a dollar issue.

  The French, de Gaulle, tried to make an issue of it but not until the British demanded gold for dollars did conditions tip causing Nixon to finally break our word to the world.

  Nixon could have saved our monetary system but because he was a monetarist/Keynesian he believed that a reduction in the money supply would create economic contraction and he would lose the election. He left gold and broke our word to the world for cheap political reasons.

  What is interesting is that if he had simply understood Mises and Say's law/Laffer curve he could have stopped printing dollars and allowed the market traders to set the value of the dollar in terms of gold. Then he could have established a new parity at this level then cut taxes. Had he done this the 1970s would have been one of the most prosperous periods in world history and Nixon would not have had to resign in disgrace.

  Published: June 17, 2009 4:50 PM

• alan

  Dick Fox,

  Thanks for the reply. I'll look into the resources... and I really ought to get started on Mises' Theory of Money and Credit. Last one - you have any good monetarist critiques in mind? I've read a few of Shostak's and i.m.o. he can be quite confusing. The Swiss National Bank until the late 80s used to target about 4-5% growth in the money supply (with respect to the monetary aggregates), and it worked pretty well for them.

  Published: June 17, 2009 10:54 PM

• newson

  to dick fox:
  huh??? salerno spends a good part of the podcast defending both rothbard's definition of inflation, consistent with the currency school, and subsequently his parameters for inclusion in the money supply. listen in particular to the 30 minute mark, where salerno recalculates rothbard's money supply minus net policy reserves. he does this for rhetorical purposes only, to prove that its inclusion isn't especially material. rothbard's money supply for 1921-28 grew 61%, minus the net policy reserves, this reduces to 55%. so plenty of fuel for asset bubbles. in short, salerno's is a spirited defense of the rothbard depression analysis.

  if it's personal and you don't like rothbard, lionel robbins also comes to similar conclusions in his "the great depression".

  your thesis (hawley-smoot tariffs and sundry other factors) doesn't explain why the american city experienced the skyscraper boom during the twenties. thornton deals with this here:
  http://mises.org/journals/qjae/pdf/qjae8_1_4.pdf

  
  

  Published: June 18, 2009 12:53 AM

• Dick Fox

  newson,

  Rothbard in his definition of money includes loans that would naturally increase in a period of prosperity. I have read his book and much of it is good but he is out too far trying to scrape up evidence to support his theory.

  Lionel Robbins did write some good things and I do like his book on the Great Depression, but it is pretty clear that he was confused. He ended his life embracing Keynesianism and rejecting much of what he earlier supported. I do not throw the baby out with the bath water in Rothbard or Robbins but neither do I confuse the bath water with the baby.

  Mark Thornton is cute in his skyscraper hypothesis. It ranks pretty close to the sunspot hypothesis. I usually don't try to explain such speculations.

  Published: June 18, 2009 2:33 PM

• Dick Fox

  Alan,

  The best refutations of the monetarist view that I have read are actually by Austrians. Keynesians and monetarists actually believe in the same theory though they might differ in degree so there really are no Kyenesian refutations.

  Salerno is very good. Listen to the this mp3 that newson recommended http://mises.org/multimedia/mp3/Salerno/9.mp3

  It is very good in describing how Friedman's analysis doesn't hold up.

  You might also try this mp3 by Roger Garrison http://mises.org/multimedia/mp3/MU2007/22-Garrison.mp3

  Jude Wanniski touches on this in his The Way The World Works.

  Take a look at a couple of Jude's "Supply Side University" lessons. Here is one specifically on this topic and you can follow links to others.

  http://www.polyconomics.com/ssu/ssu-990820.htm

  Published: June 18, 2009 4:06 PM

• LetUsHavePeace

  The evidence for the assertion that Franklin Roosevelt "baited the Japanese" is non-existent. The Japanese entered into the Tripartite Pact with Italy and Germany in September 1940 - 15 months BEFORE Pearl Harbor. Roosevelt's "provocation" - embargoing export of oil and steel to Japan - came in July 1941. From the point of view of the vast majority of Americans who had watched the utter brutality of the Japanese invasion of China (which began in July 1937), Roosevelt's "provocative" action seemed pathetically cautious and years too late. The Japanese attacked Pearl Harbor, the Philippines and then the Dutch and British colonial possessions because they were absolutely confident that they could win. Their only anxiety had been about the Russians; the success of the German invasion removed those doubts. There is no question that Franklin Roosevelt's economic views were disastrously wrong-headed. There is also no question that the geopolitical views of his conservative opponents who thought the United States should abandon Britain, renege on its treaty commitments to China and avoid a "Jewish" war in Europe were equally stupid. One reason that the Mises Institute has less influence than it should is that its publications consistently fail to acknowledge how much of "conservative" American thought in the 1930s was based on Teddy Roosevelt's racialist views. Mises himself was decidedly prejudiced against all things Slavic. An honest acknowledgment of Mises' bigotry would do nothing to undermine the wisdom of his economic thought; defending his irrationality towards things Russian only brings into question the honesty of the Institute's standards of scholarship. One does not need to blame Roosevelt for the Second World War in order to ridicule the utter economic folly of New Deal. On the contrary, it only raises the question of what other truths the defenders of Austrian economics are ignoring. If the Mises Institute's contributors are looking for a combination one must tie together authoritarian economics with blinkered geopolitics, they should stick with President Hoover. It was the consequence of that President's refusal to authorize construction of additional aircraft carriers that produced the balance of forces that left the U.S. Navy hopelessly outmanned in the Pacific. It is worth noting that Admiral Yamamoto's battle plan assumed that the 3 U.S. carriers would be at Pearl Harbor and that they would be destroyed along with the battleships by the 6 Japanese carriers. When the carriers were not found, Admiral Nagumo had a failure of nerve. Instead of rearming his planes and launching an attack against the fuel storage facilities, Nagumo withdrew. If the tanks had been destroyed, the Japanese plan to establish a defensive perimeter in the Eastern Pacific might well have achieved their war aim – a negotiated truce that left them in sole control of East Asia. Even after the extraordinary achievement of Midway (the supposed turning point of WW II in the Pacific), the Japanese carrier force outnumbered the Americans 8 to 2 once the losses in the Solomon Islands were taken into account. It was not until 1944 that the U.S. was able to put superior numbers in the field. Surely, if President Roosevelt had wanted to provoke a war with the Japanese, he would have waited until the odds were at least even. In the face of these and other facts, the persistence of the Mises Institute's contributors and its own officers in believing in President Roosevelt's culpability for Pearl Harbor is an embarrassment.

  Published: June 19, 2009 5:06 PM

• hooklineandsinker

  the de facto war policy which lead to the greer incident shows fdr's true face as a war-monger. mindless propaganda is best left to the government.

  Published: June 19, 2009 10:10 PM

• newson

  to alan:
  here's the rothbardian counterpoint to jude wanninski:
  http://mises.org/econsense/ch10.asp

  Published: June 19, 2009 11:00 PM

• newson

  ...and another:
  http://mises.org/daily/991

  Published: June 19, 2009 11:07 PM

• newson

  stefan karlsson has an interesting blogpost on the randian embrace of supply-side; the comments are also illuminating:
  http://blog.mises.org/archives/003091.asp

  Published: June 19, 2009 11:46 PM

• alan

  Thanks Dick Fox and Newson for the links.

  The price of gold (relative to the U.S. dollar) has actually remained fairly constant since the 80s - due to the ruthless manipulation of the gold markets by central banks, bullion banks, etc. So the supply-side gold standard doesn't quite square with reality i.m.o., so long as gold markets are being manipulated.

  I read that Hayek (later in life) favoured stabilizing MV re: the great depresion - especially to counter a possible “secondary deflation”. To increase M for the time being to offset changes in monetary velocity, and decrease M when V picks up later on. Any takes on this one?
  

  Published: June 20, 2009 3:21 AM

• newson

  to alan:
  hazlitt does a demolition job on fisher's famous (and strangely enduring) equation in this article.
  http://mises.org/daily/2916

  Published: June 20, 2009 4:39 AM