One of the discouraging features of economic debate today — maybe it was always thus, but it seems especially intense now — is how much of it rests on “facts” that aren’t, but which become articles of faith.The tragedy is that fanatical ideology of the right, an ideology that simply ignores fact and economic theory, is condemning millions to unemployment and underemployment for years and years unnecessarily. I guess this crime of the right isn't anywhere near as bad as the crime of the 1930s/early 1940s that saw a world war fought by fanatics of the right trying to change the world into its image under Hitler, Mussolini, Franco, Tojo, and the rest. But I foolishly thought the world was smarter than this. I've been shown to be an idealistic fool.
Anyway, one alleged fact I keep hearing is that recessions were short and shallow under the gold standard. I don’t know where that’s coming from, but it just ain’t so. The data aren’t as good for the pre-1933 era as they are now, but for what it’s worth they suggest that there were a number of nasty, prolonged slumps under the gold standard. In particular, the Panic of 1893 was associated with a double-dip recession that left industrial production depressed and unemployment high for more than 5 years. Here’s the estimated unemployment rate from Historical Statistics Millennial Edition:
That’s a pretty ugly, prolonged slump. Gold is no panacea.
Sunday, January 30, 2011
Right Wing Myths about Gold
Here is a very useful anti-dote to the doting of the political right with hard currency, with the gold standard. Here's a bit from a post by Paul Krugman on his NY Times blog: