George Selgin, whose work on monetary theory I’ve recommended to readers of this blog, has just come out with a new paper on the history of the gold standard in America. Here’s how he described it:
When I began exploring the topic last year, I expected to find dozens of different, compact histories of the gold standard in the U.S. In fact, I didn’t find but one, which left a number of what I considered to be important aspects of the topic unaddressed. I dare to hope, therefore, that no-one will say (as Moses Hades is reported to have said of some poor scholar’s book) that my just-released Cato Policy Analysis ”fills a much needed gap.”
No, I certainly would not say that. The paper can be (and should be) read here.
Thomas Sowell’s analysis of the Federal Reserve is spot on: it has been a disaster for the economy.
The Federal Reserve was supposed to prevent shocks to the economy that can come from drastic inflation or deflation, and reduce the dangers that can come from widespread bank failures. These are all good goals. But what is the Fed’s track record?
In the hundred years before there was a Federal Reserve System, inflation was less than half of what it became in the hundred years after the Fed was founded. The biggest deflation in the history of the country came after the Fed was founded, and that deflation contributed to the Great Depression of the 1930s. As for bank failures, they reached levels unheard of before there was a Federal Reserve System.