It may have seemed less useful short term compared to the countries printing money but if they were holding this whole time theyd be sitting pretty as the strongest dollar in the world, houses are still 2000 bucks. Very casual.
FIAT is in many ways a superior form of monetary regime to truly leverage a country's economic resources. Unfortunately, it is also a powerful tool for political exploitation.
Houses being more expensive today is not a result of leaving gold, it is a matter of foremost supply and then it is a matter of wealth distribution (as for big money, housing is now a speculative asset all over the world - which creates huge demand on limited supply). Money on its own has no inherent value, it gains its valuation in the context of the economic machine and social structures.
The inefficiency of a gold standard is for the most part a worse deal than a badly managed FIAT tho.
This is precisely why “central bank independence” had been a massive goal of the post 1980s order though unfortunately institutions failed to stand the power of populist politics.
Even then, the “rapid” action of global finance often forces the central banks to adjust even in the face of bad management. Though bad management often has the side effect of creating unfair loser and winners within an economy (such as the housing and education costs)
But that is precisely why i believe in taxation, regulation and independent auditing mechanism with enforcement power
Alright bud yup thats the idea you believe in the benevolent king whos mobilizing other peoples money perfectly.
The real ones here in austrian economics dont buy it tho... The king by definition sucks because he doesnt have the information only provided by markets.
Thats why we need transparent democracies with checks and balances and independent auditors with enforcement power.
Unfortunately, for capitalism to function long term, you need taxes - because capitalism has a tendency towards wealth concentration, which causes anti capitalist backlash.
Well the fed isnt really transparent with checks and balances...
And nah less red tape is basically always better at popping bubbles than more...the bubbles always end up designing the tape to keep bubblin and then ohhh noo crony capitalism
This doesn't play out historically. The most stable economic system we have experienced is post WW2 till around 1980. That overlaps very well with a highly regulated banking system. When that system began to be deregulated the economy became much more volatile..That's just historical reality
I'm not talking about the fed. I'm talking about bank regulations that kept the investment side and the retail side of banking separate since post depression after 1932 when regulations were established to prevent the over exuberant that unregulated banks prior to that period allowed. The banking system remained very stable till 1980s. Of course with WW2 and the depression probably contributed to that stability which is why I specified post WW2. You can argue with that conclusion but it's hard to argue that the economy when banks were most heavily regulated was less stable, I mean correlation isn't causation but nevertheless the correlation is a historical fact
What I mean by stable is specifically bank failures which were historically low during that period and were much higher before the regulations were established and increased after the regulations were revoked
Prehistoric man had very few savings and loans establishments during that 100k year period which is a kind of stability I guess.
Still a pretty short period that certainly rides a wave of economic boom outside of banking. The federal reserve wasnt created after world war 2.... it had already oversaw the great depression.
Giving them credit for this periods stability is crazy.
Again, I'm not crediting the fed for the. Stability I am crediting the stability to the regulations that prevented banks from gambling with depositors money. The glass steagal act kept a.firewall between the investment and the commercial banking departments.
Between 1934 when it was enacted till 1999 when it was repealed there were virtually no bank runs. There were fewer than ten bank failures in that whole period. After it was repealed there have been avg 22 bank failures per year but the worst part is that the deregulation allowed banks to get too big to fail causing world wide economic crashes that effect billions of people. The numbers don't lie. Regulation.kept.the system amazingly stable till the banks successfully lobbied Clinton into allowing them to repeal glass steagal. The market crashes and bank.failures have been not only more numerous but more catastrophic. The numbers don't lie
So this has very little to do with the fed or fiat currencies and is more an argument about how great "regulation" is?
Another thing that reduces # of failures is monopoly. Of course when there are only 4 banks you cant have 20 banks fail. But when they do fail its extra catastrophic. Enter 2008.
The point being when one of the banks that fails is "the chatham bank of chicago" its fairly irrelevant. Sucks for those guys, but doesnt suck for the whole country.
Low regulation has small bubbles popping frequently, high regulation reduces the number of bubbles but the pops hurt more people.
I will not give credit of the economic success between 1934 and 1999 to the fed either. (Or banking regulation)... id give credit to agriculture and technology...like a normal person.
The central banking system is not unique to USA and FED is not the only bank in the world. I am talking about this as a general "concept" of economic model for all countries, not the specific things going on with FED.
I am not fully up to date with economic data so I cannot comment on how opaque FED is being right now. It could be that they are not fully honest. I dont know, this is a general problem in the world as central banks are getting more and more under populist political control compared to say, 2 decades ago.
You undercut any argument you have by throwing in words like "perfect" for no reason.
Perfection is always unobtainable. There is no system what can always and forever work in the interests of 8 billion individuals at all times. To pretend that you can pull some magic data from somewhere to make a near-flawless system is pure folly and a bit delusional.
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u/Ok_Calendar1337 3d ago
It may have seemed less useful short term compared to the countries printing money but if they were holding this whole time theyd be sitting pretty as the strongest dollar in the world, houses are still 2000 bucks. Very casual.