<p>Ok, If you don’t agree with me just look at inflation from 1800-1913: </p>
<p><a href=“http://upload.wikimedia.org/wikipedia/en/e/ef/USACPI1800.png[/url]”>http://upload.wikimedia.org/wikipedia/en/e/ef/USACPI1800.png</a></p>
<p>From looking at the graph it seems that prices actually dropped.</p>
<p>Different times with a complete change in our economic model from farming to manufacturing. It has worked well enough since the dark days of Jimmy Carter and that’s enough.</p>
<p><em>cough</em> There can be a change in the basket of CPI goods. <em>cough</em></p>
<p><em>cough</em> There could be a worldwide trend of currency inflation. <em>cough</em></p>
<p><em>cough</em> Inflation isn’t the end-all, be-all of domestic finance. <em>cough</em></p>
<p><em>cough</em> CPI can overestimate the cost of living. <em>cough</em></p>
<p>Read the Boskin Commission’s report on the problems with using CPI to determine inflation.</p>
<p>jclay, this is total deja vu. Seems last time around you were making baseless claims, not at all grounded in fact, regarding how the Fed works, and what causes inflation.</p>
<p>It’s basically useless to argue with you until you learn more, because all you’re doing is shooting off arguments based on misinterpretation or outright ignorance of economics.</p>
<p>Here’s a hint for the picture that’s the subject of this thread: the Fed’s sole goal is not to fight inflation. That’s one of them, but certainly not the only one.</p>
<p>Ok since all of you people are so smart, explain to me how our country experienced health growth in real GDP from the time of the Civil War to 1910 yet maintained little to no inflation. Seems like a pretty sweet deal, doesn’t it. Also, that graph is given from the minneapolis fed.</p>
<p>Oh, 1of42 stop insulting me and start giving me facts if my claims are so way out there.</p>
<p>who cares the government is never going to tell us the truth about anything whatsoever. Issue Resolved.</p>
<p>UriA702, if enough people care then the truth will be found out.</p>
<p>So you’re saying you want me to teach you macroeconomics? Sorry, but that’s what teachers are for. Trying to learn it off a forum is not going to work out very well for you, fully aside from the fact that I truly don’t have time to it to you.</p>
<p>Anyways, I’m not insulting you, I’m pointing out the truth. You haven’t learned enough economics, as you’ve admitted yourself. The first time you came on with wildly absurd and simplistic claims, I humored you, but it’s clear, given that this is the 2nd time, that your arguments stem largely from your ignorance of economics. And it’s not my place to teach you. Go to school. Learn it all properly. Then start trying to apply it and debate it.</p>
<p>1of42: Ok, my dad has an MBA from U of Chicago and has taught economics for a state university. He agrees with me that the FED is awful and that we were worse off after 1913. He has gone to school and he is not ignorant of economics. For my father’s sake, can you shed some wisdom on the question I prompted in this thread.</p>
<p>Oh 1of42, I just looked you up and it appears you are a first year college student. You are at no level to just shut me down and tell me to go to school.</p>
<p>I’m curious to read how inflation hasn’t gone up since the existence of the Fed at higher rates than before the Fed existed.</p>
<p>“Seems last time around you were making baseless claims, not at all grounded in fact, regarding how the Fed works, and what causes inflation.”</p>
<p>I am also curious to read about the causes of inflation and how the Fed doesn’t have a hand in this. A big hand.</p>
<p>Anyone with any input welcome.</p>
<p>jclay2, I agree with your father and you. The Fed has been awful, especially in the last 9 years. Greenspan was terrible in his later years. Should have shipped him out in the mid-nineties.</p>
<p>Volcker was excellent.</p>
<p>It’s not exactly tough to figure out that I’m in first year university, given that I say it in my location line. As for whether or not I’m more qualified than you, apparently I’m more qualified by about 3 courses in macroeconomics. But that’s really neither her nor there. Doesn’t make me a PhD in economics, but it means that I at least know the grounding of what I’m saying, as opposed to “if inflation happens someone must be getting free money” and all that.</p>
<p>Anyways.</p>
<p>The Fed doesn’t do a particularly great job at what it’s designed to do, all of the time - for example, the Fed completely failed to do its job in preventing the Great Depression - but that’s not what this argument is about, as far as I can tell. This isn’t between “the Fed is doing a good job” and “the Fed isn’t doing a good job”. This is between “the Fed should not exist, and we should be on the gold standard” and “we should keep our current system” - unless I’m hugely misreading what jclay wrote.</p>
<p>I can’t argue that the Fed has done its job particularly well, because in hindsight it largely hasn’t. But I can certainly argue that the economy is better off than under a gold standard. And I have argued that at length in other threads.</p>
<p>Just a nitpick: Yes, prices declined from 1800-1913. That’s not really a very good thing, as it happens - deflation is pretty terrible for the economy.</p>
<p>I don’t want to go on the gold standard.</p>
<p>I understand that deflation is bad for asset prices and people won’t invest if prices of an asset are going down.</p>
<p>Is deflation bad for consumers? Consumers seem pretty happy when technology prices go down. When oil and other energy costs go down in price. If we are making productivity gains of 3% a year, why aren’t prices going down? Population growth is 1.5% a year.</p>
<p>1of42: Hey why don’t you check out </p>
<p>[url=<a href=“http://eh.net/hmit/gdp/gdp_answer.php?CHKrealGDP=on&year1=1800&year2=1913]Results[/url”>http://eh.net/hmit/gdp/gdp_answer.php?CHKrealGDP=on&year1=1800&year2=1913]Results[/url</a>]</p>
<p>If you do the compounding, from 1800-1913, real gdp grew at nearly 4% annualy. Also the deflation you are talking about when you do the compounding over 113 years it is almost insignificant. </p>
<p>Ok, so how can an economy with nearly 4% real gdp growth and nearly 0% inflation be bad? From the evidence it seems that we should be back on the gold standard. So far I have presented you with evidence, I would appreciate it if you return the favor.</p>
<p>jclay2, does your dad really want to go back to the gold standard?</p>
<p>Yes, he does. Just read post #15. I would say that is better than 3% inflation annually for a century.</p>
<p>jclay2, that growth was off a very small base compared to the growth of the last 100 years.</p>
<p>Also the population grew much faster in the 19th century compared to the 20th.</p>
<p>China is growing at what, almost double digit rates right now? As their economy gets bigger their growth will slow too.</p>
<p>So, are you saying the FED has fostered and is responsible for the growth in the last 100years.</p>
<p>No. That’s not what I said.</p>
<p>I’m talking about the law of big numbers. It is easier to compound something from a lower base than a higher base.</p>
<p>Does your dad think the credit crunch we are having is deflationary?</p>
![http://upload.wikimedia.org/wikipedia/en/e/ef/USACPI1800.png[/url]](http://upload.wikimedia.org/wikipedia/en/e/ef/USACPI1800.png%5B/url%5D){kind=link}
