# What would happen if the US decided to punt the FED? **URL:** \ **Category:** Great Debates\ **Created:** [July 19, 2016, 2:31am UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279 "2016-07-19T02:31:03Z")\ **Posts on this page:** 20\ **Page:** 4
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 20, 2016, 9:38pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/61 "2016-07-20T21:38:46Z")
> [@WillFarnaby](#): > > Question 1)Yes it tells me they passed FDIC after the onset of the first depression. > > Question 2) It tells me there is a crude correlation that is better explained after deeper thinking. It also reminds me that a more relevant observation is the one of several panics pre FDIC, and one panic post FDIC. I’m confused. Do you think the FDIC prevents recessions? It prevents runs on banks by assuring people they can get their money out. Do you know of any bank runs since the Depression? If they didn’t happen during the Bush I disaster or the Great Recession, they probably never will. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 21, 2016, 12:53am UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/62 "2016-07-21T00:53:53Z")
> [@Voyager](#): > > I’m confused. Do you think the FDIC prevents recessions? It prevents runs on banks by assuring people they can get their money out. Do you know of any bank runs since the Depression? If they didn’t happen during the Bush I disaster or the Great Recession, they probably never will. No i have consistently stated that banking panics, that is the realizations of bank insolvency by a critical mass of depositors and the subsequent withdrawal from a large number of failing institutions, were prevented by FDIC. Recessions have occured in both the pre-Fed and Fed eras. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 21, 2016, 1:00pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/63 "2016-07-21T13:00:43Z")
> [@DrDeth](#): > > Cite? > > [http://blogs.wsj.com/economics/2015/12/14/a-brief-history-of-u-s-inflation-since-1775/](http://blogs.wsj.com/economics/2015/12/14/a-brief-history-of-u-s-inflation-since-1775/) > > There were periods of stagflation and even huge deflation. The economy was anything but stable. Your cite will suffice as my cite. My claim you quoted was that there was less inflation under the pre-Fed gold standard than any other monetary regime since. You responded by claiming there was deflation during the pre-Fed gold standard period. A strange rebuttal. The chart in your link shows that there was indeed a moderate and consistent deflation during the pre-Fed gold period that turns into a consistent and low-moderate inflation with small and quick deflationary corrections. The most inflationary periods after the Civil War are 1) the war inflation around WWI 2) The WWII inflation 3) the Vietnam era inflation 4) the “Great Moderation” of consistent moderate inflation. 1. occurred during the post-Fed gold period 2. occurred before and after the institution of Bretton Woods 3. occurred before and after collapse of Bretton Woods 4. occurred under post Bretton Woods period I will stand by the claim that all of these periods are more inflationary than the pre-Fed gold period of 1879-1913/4 ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 21, 2016, 1:05pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/64 "2016-07-21T13:05:01Z")
> [@crypto](#): > > I’m not advocating a “willy-nilly”, unlimited printing press. > > What I was trying to understand was what would happen if the treasury took the Fed out of the loop, and what would happen if that occurred. I know you don’t advocate that but what would happen is that they would print money willy-nilly. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [July 21, 2016, 6:30pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/65 "2016-07-21T18:30:27Z")
> [@WillFarnaby](#): > > Your cite will suffice as my cite. My claim you quoted was that there was less inflation under the pre-Fed gold standard than any other monetary regime since. You responded by claiming there was deflation during the pre-Fed gold standard period… A strange rebuttal. > > The chart in your link shows that there was indeed a moderate and consistent deflation during the pre-Fed gold period that turns into a consistent and low-moderate inflation with small and quick deflationary corrections. The most inflationary periods after the Civil War are 1) the war inflation around WWI 2) The WWII inflation 3) the Vietnam era inflation 4) the “Great Moderation” of consistent moderate inflation. > > 1. occurred during the post-Fed gold period > 2. occurred before and after the institution of Bretton Woods > 3. occurred before and after collapse of Bretton Woods > 4. occurred under post Bretton Woods period > > I will stand by the claim that all of these periods are more inflationary than the pre-Fed gold period of 1879-1913/4 My exact words “_There were periods of stagflation ._…” That means **huge staggering out of control inflation.** The economy was extremely unstable. There were also bad periods of deflation, too. There was \*\*nothing \*\*“\*moderate and consistent” \*during the Gold Standard periods, which is why we got off it. ---
**Author:** ![RickJay](https://avatars.discourse-cdn.com/v4/letter/r/bb73d2/32.png) [@RickJay](https://boards.straightdope.com/u/RickJay)\ **Post date:** [July 21, 2016, 7:02pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/66 "2016-07-21T19:02:17Z")
> [@crypto](#): > > How about United States Notes? (Like Kennedy issued with an executive order?). Straight from the US Treasury, interest free. Or did I misunderstand that, too? Isn’t it basically what Lincoln issued with greenbacks? I’m not sure where your idea comes from that United States Notes were an invention of the Kennedy administration. They were a creation of the Lincoln administration and were continuously in use thereafter. ---
**Author:** ![bump](https://avatars.discourse-cdn.com/v4/letter/b/7c8e57/32.png) [@bump](https://boards.straightdope.com/u/bump)\ **Post date:** [July 21, 2016, 7:37pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/67 "2016-07-21T19:37:39Z")
> [@crypto](#): > > People believe they have some magical power to control inflation. They control it, alright, but they don’t combat it. Huh? There’s no good reason to “combat” inflation in the sense of getting rid of it, or going into deflation. A certain degree of inflation is _good_ for the economy. What the Fed does do is try and influence inflation to remain at a more or less low-ish, steady and predictable rate, so that the economy hums along. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 21, 2016, 9:47pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/68 "2016-07-21T21:47:52Z")
> [@DrDeth](#): > > My exact words “_There were periods of stagflation ._…” That means **huge staggering out of control inflation.** The economy was extremely unstable. There were also bad periods of deflation, too. > > There was \*\*nothing \*\*“\*moderate and consistent” \*during the Gold Standard periods, which is why we got off it. Stagflation does not mean “huge staggering out of control inflation”. It means inflation coupled with high unemployment. In any case your cite proves you wrong. Where is the “staggering inflation” from 1879-1913? It stands out as a particularly moderate period in between the war inflations of the Civil War and WWI. Unless you suffer from the irrational fear of deflation many experience, there is no “bad” deflation during this period either. There is a moderate deflation which is characteristic of increases in productivity coupled with a relatively stable money supply. I pointed to the work of Christina Romer, which suggests your claims of wild instability due to the gold standard are wrong. ---
**Author:** ![Deeg](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/deeg/32/2955_2.png) [@Deeg](https://boards.straightdope.com/u/Deeg)\ **Post date:** [July 21, 2016, 9:53pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/69 "2016-07-21T21:53:01Z")
> [@WillFarnaby](#): > > No. Under the classical gold standard pre-Fed, there was less inflation than the gold standard Fed period, the British dominated Gold-exchange standard period, the Bretton-Woods period, and the post Bretton-Woods period. Not true. 1850 and 1899 saw [some of the highest non-war inflation](https://eh.net/encyclopedia/california-gold-rush) in US history: - Soaring gold output from the California and Australia gold rushes is linked with a thirty percent increase in wholesale prices between 1850 and 1855. Likewise, right at the end of the nineteenth century a surge in gold production reversed a decades-long deflationary trend and is often credited with aiding indebted farmers and helping to end the Populist Party’s strength and its call for a bimetallic (gold and silver) money standard.\* ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 21, 2016, 9:54pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/70 "2016-07-21T21:54:27Z")
> [@bump](#): > > Huh? There’s no good reason to “combat” inflation in the sense of getting rid of it, or going into deflation. A certain degree of inflation is _good_ for the economy. > > What the Fed does do is try and influence inflation to remain at a more or less low-ish, steady and predictable rate, so that the economy hums along. There was plenty of low-ish, steady and predictable inflation in the decades preceding the Financial Crisis. The problem with monetary inflation by the Fed is not hyperinflation or even high inflation. It is malinvestment and distortion of the capital structure. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 21, 2016, 9:58pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/71 "2016-07-21T21:58:07Z")
> [@Deeg](#): > > Not true. 1850 and 1899 saw [some of the highest non-war inflation](https://eh.net/encyclopedia/california-gold-rush) in US history: > > - Soaring gold output from the California and Australia gold rushes is linked with a thirty percent increase in wholesale prices between 1850 and 1855. Likewise, right at the end of the nineteenth century a surge in gold production reversed a decades-long deflationary trend and is often credited with aiding indebted farmers and helping to end the Populist Party’s strength and its call for a bimetallic (gold and silver) money standard.\* 1850 was before the true gold standard. I expressly mentioned 1879-1913 as the pre-Fed gold standard period. According to the cite by **DrDeth** , price inflation remained low to moderate in the turn of the century period you mention. ---
**Author:** ![dtilque](https://avatars.discourse-cdn.com/v4/letter/d/d6d6ee/32.png) [@dtilque](https://boards.straightdope.com/u/dtilque)\ **Post date:** [July 21, 2016, 11:40pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/72 "2016-07-21T23:40:44Z")
> [@nightshadea](#): > > I mean what if we have a fallout type of situation and post apocalyptic man decides that gold is worthless and bottlecaps and bread wrapper tabs is worth more ? Then I’d be rich. I have a jar full of bread wrapper tabs on my kitchen counter… The thing about the Fed and the Great Depression is that the Fed was hamstrung by the US still being on the gold standard. They wanted to increase the money supply to combat deflation, but they were limited by the fixed $20/ounce gold price. There were some half measures made to fix this problem. They changed the fixed price to $35/ounce and made gold illegal to own. People were supposed to sell their gold to the Fed so that it could issue more money, but as I understand it, only banks actually did this. At any rate, these half measures weren’t enough, so the Depression dragged on until WWII. To really fix the GD, they’d have had to go completely off the gold standard. ---
**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\ **Post date:** [July 22, 2016, 6:02am UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/73 "2016-07-22T06:02:39Z")
> [@WillFarnaby](#): > > Unless you suffer from the irrational fear of deflation many experience, there is no “bad” deflation during this period either. There is a moderate deflation which is characteristic of increases in productivity coupled with a relatively stable money supply. Irrational fear of deflation? Deflation does two things. One, it makes borrowers suffer, because loans made when money is cheap are repaid when money is more expensive - with interest. Thus the old movie stereotype of the old widow being thrown out of her house by the evil banker. Second, it discourages purchases since people will wait for prices to fall. Moderate inflation encourages purchases since we buy now before the prices go up. Reduced purchasing, reduced manufacturing and sales, reduced employment. ---
**Author:** ![rat\_avatar](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/rat_avatar/32/255_2.png) [@rat\_avatar](https://boards.straightdope.com/u/rat_avatar)\ **Post date:** [July 22, 2016, 7:40am UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/74 "2016-07-22T07:40:25Z")
> [@dtilque](#): > > Then I’d be rich. I have a jar full of bread wrapper tabs on my kitchen counter… > > The thing about the Fed and the Great Depression is that the Fed was hamstrung by the US still being on the gold standard. They wanted to increase the money supply to combat deflation, but they were limited by the fixed $20/ounce gold price. > > There were some half measures made to fix this problem. They changed the fixed price to $35/ounce and made gold illegal to own. People were supposed to sell their gold to the Fed so that it could issue more money, but as I understand it, only banks actually did this. At any rate, these half measures weren’t enough, so the Depression dragged on until WWII. > > To really fix the GD, they’d have had to go completely off the gold standard. The gold standard proponents also ignore the issues with population growth relative to gold supply. With todays world population there is only around 24 grams of gold per person in the entire world. Also the argument tends to ignore that money is really just a way to make IOUs more practical in day to day transactions. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 22, 2016, 11:29am UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/75 "2016-07-22T11:29:49Z")
> [@Voyager](#): > > Irrational fear of deflation? Deflation does two things. One, it makes borrowers suffer, because loans made when money is cheap are repaid when money is more expensive - with interest. Thus the old movie stereotype of the old widow being thrown out of her house by the evil banker. > Second, it discourages purchases since people will wait for prices to fall. Moderate inflation encourages purchases since we buy now before the prices go up. Reduced purchasing, reduced manufacturing and sales, reduced employment. Deflation is a symptom. It’s not a rogue beast that comes out of nowhere. And we all know IPhones, automobiles, and TVs never sell when they are first introduced because everyone knows the price will fall. Do you disagree that all other things equal, a steady money supply and increasing productivity will result in deflation? The longest period of deflation happens to coincide with what even Milton Friedman agreed was the most prosperous period in American history, so maybe you should be more precise when you scaremonger over deflation. Yes, there was deflation during the Great Depression. This is because the bubble of the 20’s had burst and malinvestment was made evident. In order to reallocate resources that had been diverted into unprofitable endeavors, prices must fall. What extended the Depression was government intervention. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [July 22, 2016, 1:06pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/76 "2016-07-22T13:06:01Z")
There is much that needs refutation in Farnaby’s posts, but I’ll start with one persistent counter-factual spin. > [@WillFarnaby](#): > > … even Milton Friedman … > What extended the Depression was government intervention. First, I’m curious about your use of the adverb(_) “even.” is this your way of showing surprise that the famous Nobel Prize-winner, an important advocate of Quantitative Easing, might agree with the beliefs of more [checks forum] extreme pundits? (_ - In the phrase “even Milton Friedman” I call “even” an adverb. Start a GQ thread if you want to discuss this.) If so, you’re wrong. There is an incorrect interpretation of Friedman’s writings used to support an anti-government agenda. Right-wing pundits, and even Friedman himself, delight in putting an anti-government spin on Friedman’s teachings, but let’s drop the spin and focus on … gasp … Friedman’s actual objective work. According to Milton Friedman, the Great Depression happened NOT because the government and central bank intervened _but because they didn’t._ Yes folks, _ **WillFarnaby** has it exactly backwards._ Friedman prefers to speak of a declining supply of money rather than declining price levels, but obviously the two declines go hand in hand. The declining supply of money went hand-in-hand with bank failures. According to Friedman, that was the cause of the Great Depression: a vicious cycle of tight money and bank failures. When he blames the Fed, he’s not blaming it for intervening, but _just the opposite_ — he argues, and most reputable economists will agree, that the Fed _should_ have intervened with programs similar to those adopted during the 2008 crisis such as Troubled Asset Relief and Quantitative Easing. (Apologies to Mr. Farnaby for focusing on the ideas of Friedman — I think he prefers the ideas of more exotic “economists” — but I’m writing for all Dopers in the thread.) Let’s repeat the key point: As Friedman himself makes clear, _it was the **failure** of the Federal Reserve to intervene properly that led to bank failures and deflation and the prolongation of the Great Depression._ (Instead of contrasting the inept FRB policies of 1930-1932 with a what-if assumption of more enlightened policies, one can posit a third possibility: the counterfactual possibility that the government had no central bank at all in 1930. Friedman might argue, and Farnaby would certainly happily agree, that the banking system would have been better off with no central bank at all than with an inept central bank, but that would be a digression too far in this post. In fact the U.S. _did_ have a central bank in 1930 and _ **the Depression resulted from the failure of that central bank to intervene.** _) The Great Depression was caused by the F.R.B.'s _Laissez-faire_ attitude, and not as right-wing anti-government nuts would have you believe, by over-active federal policies. Hope this helps. ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 22, 2016, 1:56pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/77 "2016-07-22T13:56:50Z")
> [@septimus](#): > > There is much that needs refutation in Farnaby’s posts, but I’ll start with one persistent counter-factual spin. > > First, I’m curious about your use of the adverb(_) “even.” is this your way of showing surprise that the famous Nobel Prize-winner, an important advocate of Quantitative Easing, might agree with the beliefs of more [checks forum] extreme pundits? (_ - In the phrase “even Milton Friedman” I call “even” an adverb. Start a GQ thread if you want to discuss this.) > > If so, you’re wrong. There is an incorrect interpretation of Friedman’s writings used to support an anti-government agenda. Right-wing pundits, and even Friedman himself, delight in putting an anti-government spin on Friedman’s teachings, but let’s drop the spin and focus on … gasp … Friedman’s actual objective work. > > According to Milton Friedman, the Great Depression happened NOT because the government and central bank intervened _but because they didn’t._ Yes folks, _ **WillFarnaby** has it exactly backwards._ > > Friedman prefers to speak of a declining supply of money rather than declining price levels, but obviously the two declines go hand in hand. The declining supply of money went hand-in-hand with bank failures. According to Friedman, that was the cause of the Great Depression: a vicious cycle of tight money and bank failures. When he blames the Fed, he’s not blaming it for intervening, but _just the opposite_ — he argues, and most reputable economists will agree, that the Fed _should_ have intervened with programs similar to those adopted during the 2008 crisis such as Troubled Asset Relief and Quantitative Easing. > > (Apologies to Mr. Farnaby for focusing on the ideas of Friedman — I think he prefers the ideas of more exotic “economists” — but I’m writing for all Dopers in the thread.) > > Let’s repeat the key point: As Friedman himself makes clear, _it was the **failure** of the Federal Reserve to intervene properly that led to bank failures and deflation and the prolongation of the Great Depression._ > > (Instead of contrasting the inept FRB policies of 1930-1932 with a what-if assumption of more enlightened policies, one can posit a third possibility: the counterfactual possibility that the government had no central bank at all in 1930. Friedman might argue, and Farnaby would certainly happily agree, that the banking system would have been better off with no central bank at all than with an inept central bank, but that would be a digression too far in this post. In fact the U.S. _did_ have a central bank in 1930 and _ **the Depression resulted from the failure of that central bank to intervene.** _) > > The Great Depression was caused by the F.R.B.'s _Laissez-faire_ attitude, and not as right-wing anti-government nuts would have you believe, by over-active federal policies. > > Hope this helps. [Wrong!Wrong!](https://m.youtube.com/watch?v=kRmc9IPGmiA) You chopped up my sentences in order for you to beat on a strawman. Step your game up. I’m well aware of Friedman’s errors on the Great Depression. Friedman was a Fisherite, and Fisher was laughably wrong about the Great Depression. The only difference is Friedman had the benefit of hindsight. I never claimed that Friedman blamed the Great Depression on the Fed’s tight policy. In fact I even referenced the famed pronouncement by Bernanke to Friedman. What I said was that Friedman agreed that the most prosperous period in American history was during a time of deflation. Murray [Rothbard](https://mises.org/sites/default/files/History%20of%20Money%20and%20Banking%20in%20the%20United%20States%20The%20Colonial%20Era%20to%20World%20War%20II_2.pdf): > [@](#): > > By some measures the 1880s was the most productive decade in our history. In their A Monetary History of the United States, 1867–1960, Professors Friedman and Schwartz quote R.W. Goldsmith on the subject: > > “The highest decadal rate [of growth of real reproducible, tangible wealth per head from 1805 to 1950] for periods of about ten years was apparently reached in the eighties with approximately 3.8 percent.” The 1880’s were times of deflation and great growth. I know it makes a ton of people mad, but it’s true. In short, there was no counterfactual spin. I wasn’t even addressing the Great Depression in your quote of me. You tried to spin that into an inane criticism of right-wing rhetoric, and tried to associate me with that. Try harder, bud. ---
**Author:** ![septimus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/septimus/32/410_2.png) [@septimus](https://boards.straightdope.com/u/septimus)\ **Post date:** [July 22, 2016, 4:33pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/78 "2016-07-22T16:33:52Z")
> [@WillFarnaby](#): > > I wasn’t even addressing the Great Depression … Try harder, bud. You wrote: > [@](#): > > What extended the Depression was government intervention. I refuted _that_ error. My post was very explicit in its purpose. It sounds like you resent my not refuting your other errors as well. But time is short. Rather than focus on specific 19th-century monetary details, wouldn’t it be more constructive for you to post an essay explaining your hilarious assertion that property rights arose _in spite of_ government, rather than _because_ of it? ---
**Author:** ![WillFarnaby](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/willfarnaby/32/514_2.png) [@WillFarnaby](https://boards.straightdope.com/u/WillFarnaby)\ **Post date:** [July 22, 2016, 5:13pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/79 "2016-07-22T17:13:58Z")
> [@septimus](#): > > You wrote: > I refuted _that_ error. My post was very explicit in its purpose. > > It sounds like you resent my not refuting your other errors as well. But time is short. Rather than focus on specific 19th-century monetary details, wouldn’t it be more constructive for you to post an essay explaining your hilarious assertion that property rights arose _in spite of_ government, rather than _because_ of it? You sliced and diced my paragraph so you could unload a canned attack on right wing rhetoric about Friedman and the Depression. I had made no reference to Friedman’s views on the Depression, but you tried to associate me with the flawed right wing rhetoric. That’s disrespectful. ---
**Author:** ![DrDeth](https://avatars.discourse-cdn.com/v4/letter/d/b487fb/32.png) [@DrDeth](https://boards.straightdope.com/u/DrDeth)\ **Post date:** [July 22, 2016, 5:35pm UTC](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279/80 "2016-07-22T17:35:45Z")
> [@WillFarnaby](#): > > In any case your cite proves you wrong. Where is the “staggering inflation” from 1879-1913? It stands out as a particularly moderate period in between the war inflations of the Civil War and WWI. > > Unless you suffer from the irrational fear of deflation many experience, there is no “bad” deflation during this period either. There is a moderate deflation which is characteristic of increases in productivity coupled with a relatively stable money supply. > > I pointed to the work of Christina Romer, which suggests your claims of wild instability due to the gold standard are wrong. You cant cherry pick out dates. According to Gold bugs from 1776 to 1935 the economy of the USA should have been stable. It was anything but, with periods of up to 30% inflation and periods of 20% deflation. That’s a 50% variation. After we got off the gold, the variation has not been higher than 15%. In other words, the Gold standard was DE-stabilizing. While, yes, there \*are \*benefits to a mild deflation (and mild inflation too), a 20% deflation is disastrous. [Previous page](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279.md?page=3) [Next page](https://boards.straightdope.com/t/what-would-happen-if-the-us-decided-to-punt-the-fed/760279.md?page=5)