It's depressing to me that modern economies like the US and Europe can be so shot through with central planning, and then when they produce bad results everyone pretends it's the fault of some freewheeling laizzes-faire policy that never existed.
The US didn't have this at the end of the 19th century and they suffered through multiple bouts of mass unemployment and deflation as a result. That's why the Federal Reserve was created.
Central planning can be done well or badly. It can't not be done at all.
Except even then, government intervention in money fixed a certain price ratio of gold and silver. When that ratio no longer reflected the real market prices, chaos predictably appeared in the banking system. Go back over the history of the late 19th century panics and you'll notice one metal was fleeing the country and causing a lot of controversy. That's a government price control at work, not unfettered capitalism. The Federal Reserve Act was the wrong solution.
And yet even with the Fed, there's the stubborn little fact of the crash of 1920 -- bigger than that of 1929 -- and the rapid recovery that followed. The Fed, Congress and the Presidency did basically nothing and it was over in 18 months. So judging from the objective facts laying before us, it looks like the central planners perform best when they avoid central planning.
And my grandfather walked picket lines and got shot at. Robber barons were at the peak of their power. Children were exploited as laborers.
Let's also quote Anthony Trollope, a Victorian Londoner who was no stranger to pollution:
“Pittsburgh without exception is the blackest place which I ever saw, the site is picturesque, even the filth and wondrous blackness are picturesque.... I was never more in love with smoke and dirt than when I stood and watched the darkness of night close in upon the floating soot which hovered over the city.”
And that was in the 1860's! It only got worse from there until the 1940's.
Your rosy assessment of the country prior to the 1920's has no basis in historical fact.
Which has been true since the beginning of time. Children worked hard labor on farms instead of factories, and there was more rural poverty instead of city poverty. On average things were improving.
But that's not even the point. Parent comment is talking about the health of the economy and the federal reserve. You are talking about the distribution of wealth. We could implement something like a basic income to redistribute wealth, without getting rid of free markets and capitalism.
The goal of economic policy should be to generate the most total wealth. Then we can decide what to do with that wealth.
Somebody wants all the money to go to the 0.01%.
That would be the post WW2 years, not the latter half of the 19th century.
As bsder stated, you seem to be painting a rosy picture of a period of American history where exploitation (including child labor) was both rampant and vicious and robber baron power was approaching its peak.
>According to the likes of Paul Krugman Americans should have been eating dirt and living in caves by 1913
According to Ron Paul we have been perpetually just about to experience hyperinflation since circa 1985.
Paul Krugman's record is hardly spotless, but he is at least not making intentionally wrong predictions in order to service the needs of the ultrawealthy.
>Except even then, government intervention in money fixed a certain price ratio of gold and silver. When that ratio no longer reflected the real market prices, chaos predictably appeared in the banking system
This is backwards. The chaos was caused by that gold standard. Financial panics were inordinately common and severe during the latter half of the 19th century. Much more so than they were after 1977.
Sorry, as it's 2015, we were looking at the Nordic countries.
The money created by central banks only accounts for about 3% of the monetary base, the remaining 97% of money that circulates in the economy is created by private banks, lending money out of thin air. Therefore money supply is actually dictated by how confident private banks are to lend to the public. A central bank can try to incentivize lending by lowering interest rates, but in the end it's private banks who choose whether to lend or not (in Europe it didn't work so well..).
It's still a pretty fucked up system either way. I think more people should work on the issue of money supply, it's probably the single most important problem in any economy.
They have more in-depth talks on their channel, if I find some better links I'll give them to you.
I can't say this theory is 100% correct, though it does explain things like the housing bubble, the failure of the ECB policy, and eurozone deflation despite the ultra low interest rates.
So far, out of everything I've read and watched, I think their model is the one that better explains the current system of money creation, but if you have any alternative links with I'm always open to reading different things on this topic.
There is a reserve ratio that must be met. That is the percent of deposits that must be kept on hand and can't be lent out. This rate is dictated by the Federal Reserve (the central bank) in the US. Adjusting this rate allows more or less lending and thus influences inflation. So in short... central banks have a lot more control over the money supply than they themselves simply creating money out thin air.
It's laissez-faire