I seldom fully disagree with everything that you post, zdreg, just 99% or so. It is true the U.S. did grow "quite nicely" before 1913! In fact it grew amazingly in size and commerce in the late 19th century during what was arguably its single most imperialist period -- though there are many other periods that can be given honorable mention. I'm thinking now of all the Filipinos that we efficiently slaughtered, to extinction in some locations, in the Spanish American War, the clever duping of the Cubans, and the "purchase" of Guam, Puerto Rico, and the Philippines from Spain. The taking of the Hawaiian islands, and Wake Island, etc. We were definitely in an expansive frame of mind. Oh, and by the way we did have a central bank prior to 1913. In fact we had one, at two different periods. And we also went for a time without any, and that did not work out well. But we grew like rabbits whether we had a central bank or not. And also, I might add, we had financial crises whether or not we had a central bank, But during the times we have had a central bank, at least it was available to help sort out the messes it created. It is also obvious that just the existence of a Central Bank alone is not a sufficient condition to guarantee inflation, because from 1913 to about the mid 1970's there were long periods when there was very little inflation interspersed with periods of very little deflation. In other words the dollar had nearly a constant buying power over long periods even though we had a Central Bank! Though I hold the Greenspan led Central Bank primarily responsible for the recent financial crisis in the U.S. and hence any inflation that may have resulted from that crisis, it is Congress, not the Central Bank that is usually the root culprit in causing inflation. And in one sense Congress is always responsible, because the Central Bank is a creature of Congress, serves entirely at their pleasure, and they can change its charter or rules under which it operates at any time.
Serious question: If Ben Bernanke had been Fed Chairman from 1987-2006, do you believe that he would have done anything differently? Isn't it possible that he is even more "dovish" than Greenspan and would have kept rates just as low (if not lower) for just as long a period...which would have had the exact same impact on housing prices. The same level of praise was heaped upon Greenspan as the credit bubble was inflating (hell, many books were written referring to him as the "Maestro"), and now he is largely held responsible for the mess. Why will the end of Bernanke's tenure prove differently? When we are on our umpteenth iteration of QE and growth is still flatlining OR if/when we have another serious correction in asset prices, won't we simply repeat this process time and time again?
piezoe doesn't really believe what he says, but as long as you spew forth your uneducated right wing venom, he will counter act with the left wing response. You give up a little of yours, and he will give up a little of his. But isn't that always the problem of compromise? Who goes first? You go first and I'll follow. And that is leadership in a nutshell. A true leader that can inspire men is the first one to give up something, but he has done all the intricate work of having the back up plan in force, just in case it doesn't work out. The first leader who really inspired me was John F. Kennedy. He caved in first, just gave up, threw in the towel, when it came to invading Cuba.
Actually, Greenspan was a "hero" to the right, in case you had forgotten. All that free market b.s. that he used to spew. And I didn't ask you...
we are all reasonable men. And we know you can't tax your way to prosperity, and you can't cut your way to prosperity, and you can't spend your way there and you can't reduce taxes your way there. We have 4 tools in the tool box, and the debate is just simply what is the best one to use to fix this problem. The original question was, are price controls on rates reasonable? They don't ask me me because they know my answer is always, "Not my problem", I have enough problems of my own without trying to solve the problems of the world. But I enjoy listening to others solutions. You never know when one may apply to what you are trying to do at the moment.
you don't disagree with,me. you disagree with reality.your response as usual is devoid of facts. 'because from 1913 to about the mid 1970's there were long periods when there was very little inflation interspersed with periods of very little deflation. " what kind of nonsense is this stopping in the mid 70's? furthermore you don't even bother to give the change in price level during this period. you are fooling no one. it is tiresome your lack of statistics replacing with foolish anecdotes to suit your political agenda. http://inflationdata.com/inflation/Consumer_Price_Index/HistoricalCPI.aspx?reloaded=true the price level is up 5X from 1913 to the mid 70's. since then it is up 4x for the entire period.since creation of the Fed it is up therefore 20x.the dollar therefore is down 95% in that period. the Fed is an engine of inflation. it controls the money supply.
These are superb questions that you raise. Well worth discussing. I wish we had Bernanke to join in here. That would be very informative. As it is we can only guess based on what we can glean as outsiders. My first impression is that Bernanke was far more experienced and better trained, and far more accomplished as an economist than Greenspan was at the point each took over the reins of the Reserve. I think their is hard evidence of that in their biographies. Certainly we know that Greenspan very much leaned toward an objectivist and a laissez faire philosophy toward life and regulation. We can't be so sure about Bernanke, but it is abundantly clear that the Obama administration with support from Treasury and the Fed is very much trying to implement a Keynesian approach to restoring demand and employment. That is precisely what the stimulus packages and the American Jobs Act (That Obama has failed to get passed) are all about. Yet we won't hear Keynes name mentioned by Obama, Nor by the Council of Advisers, nor by Bernanke. It's been made into a dirty word by the early criticisms of the stimulus. They'd all just rather not bring up the name of Keynes. Yet to my mind it is a settled issue. Keynes was right; Hayek, Friedman and his Chicago School were wrong, and thus Greenspan was wrong as well. I see this very much as a matter of Bernanke and Greenspan being worlds apart in their economic viewpoints. Greenspan was a devotee of the failed school of Friedman, trickle down, supply-side economics, and the laissez faire anti-regulation school of economics. Bernanke is a member of what I would call the the "realist school". In other words one who is not wedded to any rigid economic theory but very well grounded in what has worked and what hasn't, and therefore what is more likely to work going forward and what is less likely. Bernanke also brings to the Fed a very modernist understanding of how world markets interact and impact domestic economies. He is clearly an internationalist ready to work closely with other central banks. Now the first question you raise: "If Ben Bernanke had been Fed Chairman from 1987-2006, do you believe that he would have done anything differently? Isn't it possible that he is even more "dovish" than Greenspan and would have kept rates just as low (if not lower) for just as long a period...which would have had the exact same impact on housing prices. Of course we can only guess here. My guess is, as Chairman, he wouldn't have been all that much different than Greenspan in the 1987-2006 period, though I expect Bernanke would not have been quite so "hands offish". But today is very different from that period. Greenspan kept rates exceptionally low when there was no need to do that. Today, we may not be in an official recession, but we are still in a crisis period with respect to jobs and some sectors of the economy. And we are not yet recovered fully from the worst financial crisis of modern times. And on top of everything there looms a huge deficit. It seems Greenspan used monetary policy to target the money supply with the goal of controlling inflation and let market interest rates seek their own level without specifically trying to target them, whereas Bernanke seems to be targeting interest rates directly using monetary policy. I'd put far more faith in Bernanke than in Greenspan, because I don't think Greenspan was, or is, capable of fully recognizing the failure of the economic theories he was taught in school. He was taught that markets are efficient and that they spontaneously tend toward equilibrium. Real markets do just the opposite. Prices are nearly always distorted, and markets tend spontaneously away from equilibrium. I believe Bernanke understands this or at least allows that it might be true. Furthermore I think that if the kind of bubbles we had developed during the Greenspan era were to develop today, Bernanke would be far more likely to do the things Greenspan refused to do even though they were suggested to him numerous times: things such as adjust margin requirements, and tighten up on mortgage underwriting standards. It is not as if Greenspan did not know about liar loans, he had been informed of them many times, but did absolutely nothing. I can't imagine Bernanke not acting under similar circumstances. I'm convinced that Greenspan's mistaken idea that markets, if left alone, would self correct excesses without crises kept him from acting. I think Bernanke would act, given the same circumstances today. Now the next Question: "Why will the end of Bernanke's tenure prove differently? When we are on our umpteenth iteration of QE and growth is still flat lining OR if/when we have another serious correction in asset prices, won't we simply repeat this process time and time again?" Again, we can only guess. But I would say because he has the benefit of hindsight, and specific expertise in the Great Depression of the 1930's, he couldn't be more qualified to lead the country out of what easily could have been a deep depression. These two men Bernanke and Greenspan are at their core not nearly as similar as it might seem. I think they are worlds apart in there economic philosophies. Granted, Bernanke failed to act in time to head off the financial crises or to the recognize the extreme dangers that lay ahead. So in a sense he has already failed once. But he had only been Fed Chairman a short while when things went rapidly downhill. We were already way too far down the wrong path by the time he took over from Greenspan. He was aware that the market was on the verge of weakening ;that's why he didn't tighten, but he obviously did not see chaos coming. Though when it did come, he acted decisively and with enough force to make a big difference. Had he had a little more time on the job when the crisis hit, I think he could have done even better. We can't know the answer to your question, but it isn't only because we don't know how Bernanke's tenure at the Fed will turn out, it is also because we don't know what the Congress will do going forward. And Congressional action is even more important in determining the country's economic future then is Fed action. I have far more faith in Bernanke than I did in Greenspan to do the right thing . I wish I had that much faith in the Congress. Here is a terrifically good article that put the various economic schools in context relative to each other: http://en.wikipedia.org/wiki/2008–2009_Keynesian_resurgence What I would say in summary is that Bernanke plays his cards close to his chest, but he certainly hasn't given us any reason as of late to make us think he is anything other than thoroughly Keynesian in philosophy. And that is just about as far from Greenspan as one can get!
you wax eloquently as above when you don't have to deal with facts or hard numbers. when presented with hard numbers you become taciturn or become reclusive.
Here is the same data seen graphically which will perhaps make it a little more understandable: http://en.wikipedia.org/wiki/File:US_Historical_Inflation.svg As you can see there was a long period from 1913 to mid 1970's when there was very little net inflation, with the exception of the war years of course, but even those expenditure were later paid for. As you can see early in the century there were alternating periods of inflation and deflation which balanced out to hardly any change in the buying power of the dollar. It wasn't until after the nixon shock (1972, wasn't it?) that we ran into more less steady inflation which when viewed in a cumulative inflation graph produces a dramatic upturn starting about the mid 1970's. As Bernanke pointed out in one of his early speeches as a member of the Fed Board of Governors, once you go to a fiat currency you don't have to put up with deflation anymore.
you continue to play loose with the numbers by showing a graph for individual years and drawing unwarranted conclusions. the bottom line is the compounding effect resulted in the price level increasing from 1914 to mid 70's by 5X and since then by 4x. like most people perhaps you lack an understanding of the power of compounding. "once you go to a fiat currency you don't have to put up with deflation anymore." if deflation were a disease, which it is not, then the cure is worse than the disease. the so called cure is continued debasement of the currency. actually deflation is a medicine to counteract the excesses of the previous business cycle.