tag:blogger.com,1999:blog-5098030884495656852.post1376669910694856616..comments2023-12-29T00:20:29.844-08:00Comments on Logicology: The Economist on Friedman vs. RothbardSean W. Malonehttp://www.blogger.com/profile/07652434357640171842noreply@blogger.comBlogger4125tag:blogger.com,1999:blog-5098030884495656852.post-36791489504741499092014-10-29T05:46:54.266-07:002014-10-29T05:46:54.266-07:00This is actually where I think a blend of Rothbard...This is actually where I think a blend of Rothbard with Friedman and Schwartz is key.<br /><br />You have the inflationary bubble that goes into the 1929 crash, but then you have a sharp contraction in the money supply along with price controls, tariffs, and a bunch of other really bad policies. I think that all combined is a pretty clear recipe for economic disaster, only exacerbated by FDRSean W. Malonehttps://www.blogger.com/profile/07652434357640171842noreply@blogger.comtag:blogger.com,1999:blog-5098030884495656852.post-22162877193158167202014-10-29T02:08:57.392-07:002014-10-29T02:08:57.392-07:00One thing I am curious about, but how would an inf...One thing I am curious about, but how would an inflationary Fed have caused the Depression itself? The inflationary policies of the Fed might have caused the 1920s bubble, but once it popped in 1929, what then led to the Depression? Because we didn't get a depression after the 1987 bubble, which was twice the size of the 1929 bubble in terms of how far the markets declined (24% as opposed to 12% in 1929), or after the 2000 bubble burst, which was twice the size of the 1987 bubble. So why did the 1929 bubble lead to a depression? <br /><br />Hoover and FDR's central planning and protectionist policies were no help, but I do believe that the Fed's allowing the money supply to collapse after the crash contributed greatly to creating the Depression.Kylenoreply@blogger.comtag:blogger.com,1999:blog-5098030884495656852.post-69205665436704511012011-12-04T21:28:15.136-08:002011-12-04T21:28:15.136-08:00I certainly agree that Rothbard (and Austrians tod...I certainly agree that Rothbard (and Austrians today, from time to time) overstate inflation. However, I don't think it's possible to look at the amount of money dumped into the economy from 1923-1929 and not see that as a major player in the excesses of the "Roaring 20's".<br /><br />Obviously, Rothbard covers this fairly extensively in "America's Great Depression"<br /><br />http://mises.org/rothbard/agd/chapter5.asp<br /><br />But you are surely correct that inflationary monetary policy is not the *sole* cause.<br /><br />Of course, I don't believe that it is the sole cause of our current problems either, and that it usually takes a combination of terrible policies to really do the big damage. I mean, if you look at the current problems as a prime example, we saw a huge amount of monetary expansion - but it took a concerted effort by the state to direct that cash into a few specific industries to really cause the major damage in housing & finance.Sean W. Malonehttps://www.blogger.com/profile/07652434357640171842noreply@blogger.comtag:blogger.com,1999:blog-5098030884495656852.post-44256744773606992452011-12-04T21:18:43.378-08:002011-12-04T21:18:43.378-08:00I love Rothbard, but I think you are wrong. Rothba...I love Rothbard, but I think you are wrong. Rothbard overstates his case about inflation. In fact, if you add up the changes in Federal Reserve Credit between June 1921 and June 1929, the amount extended is negative! Rothbard gets around this by calling bills repaid by member banks "uncontrolled reserve", as though the Fed didn't take this into account.<br /><br />While I respect Rothbard's ability to write convicting monetary and political history, his attempt to fit the buildup to the Great Depression into an Austrian model is a failure. It was the gold in flows that played a large role. Now one can claim that the problems that we experienced were the effects of bad policies by both the U.S and European governments - eg., wartime inflation, an overvalued pound, and the Dawes Plan - but that is not the same thing as saying that it was an example of the ABCT. A more realistic view is that the Great Depression was the result of a myriad of government interventions, but it surely was not caused by an inflationary Fed. On this point, Friedman is right.<br /><br />Best,<br /><br />JimJames Catonhttps://www.blogger.com/profile/14807595180565488334noreply@blogger.com