Comment by joe_the_user | Hacker News Reader

Comment by joe_the_user | Hacker News Reader

Economies where the currency was on the gold standard have also had speculative bubbles - from the tulip craze to the South Sea Bubble.

The Federal Reserve has sometimes actually served its purpose of maintaining a stable currency - notably 1935-1970 and 1980-1990.

The article does well to evoke Minsky but it should be remembered that Minsky wasn't a gold-bug but a partisan of regulated capitalism. Unlike "Austrians" and libertarians, Minsky analyzed markets as being unstable and advocated regulation. Of course, the problem is regulators can become, accommodating and corrupt as easily as markets can become unstable, rigged and speculative. That's why we have democracy - except that citizens can also become fat, lazy and stupid. So, well, you can't win. Perhaps, that's why we have cycles of dominance between nations...

There is more to the tulipmania than meet the eyes: http://mises.org/story/2564

Uh, this article is a fine example of "austro-gymnastics".

"In Garber's view, tulipmania was not a mania at all, but is explainable by market fundamentals."

Rationality is a slippery concept. A speculator who can "rationally" expect his neighbor to be the bigger fool can "rational" buy inflated items and "rationally" profit from his gullible neighbor. Whether the folks who traded acres of land for single tulips were acting in this "rational" fashion or not, speculative bubbles are clearly damaging for a society as a whole.

Similarly, perhaps these folks were acting on "market fundamentals" but this simply a humorous disproof of the claim that market fundamentals automatically produce social good.

I am not aware of any bubbles that happened without government policy. There is always a state driven monetary or fiscal component.

> maintaining a stable currency - notably 1935-1970 and 1980-1990.

By stable you mean inexorably lose value through inflation? The dollar in real terms is down something like 98% since the establishment of the Fed. Flat or falling prices was the pre-Fed norm.

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