Bob wrote:
>
> David Hillary wrote:
> >
> > Bob wrote:
> > >
> > > One more thing. The US at one time was a SOE.
> > >
> > > About 1800 in the US a dollar bill (a note, not what it is
> > > today) bought the same about 100 years later. This was a
> > > gold standard era. It had no Fed!
> >
> > and in the next 100 years after that the income tax was introduced, with
> > rates of up to 70%, the Federal Reserve was introduced, the New Deal
> > welfare state was introduced, The currency went off gold, lots of regulations
>and tariffs were passed,
> > drugs were prohibited (including liquor for a while), the environment
> > was regulated etc. etc. and the standard of living rose so dramatically
> > more than in the previous 100 years that no one could have predicted it
> > in 1900.
>
> Right. And those things above did not all start in 1900. The
> first income tax was 1913 at about a 1% rate on about 1% of the
> population (the richest of the rich). Socialist America didn't
> get a real start until the '30s. And by 1950s most of the big
> increases of the US's standard of living had been acheived.
> Todays environmental scam started later than the '50s.
>
> A lot of those increases had to do with what was going on
> during the 1800's due to a large amount of freedom and
> relative price and interest rate smoothness. (ex: cotton
> gin, which was about to make slavery unprofitable, but
> Lincoln couldn't wait as he had a 2 year old war that had
> come to a stalemate and needed a new reason to keep it going).
Can you back up your claims about growth with official statistics?
>
> Side note:
>
> > deposit
> > insurance was introduced,
>
> If you're talking about FDR and the federal government, deposit
> insurance was not introduced and to this day there is no federal
> bank account insurance, and never has been. The FDIC (Federal
> Deposit Insurance Corporation) does not provide insurance. It's
> one of the three biggest legalized government frauds going just
> like US Social Security and the US SEC (Securities and Exchange
> Commission).
I see names like Federal Deposit Insurance Coproration and assume it
means the US Federal government has established an entity to insure bank
deposits. I will have to do some homework and find out what this entity
is and does.
>
> > Under the gold standard there were periods of inflation and deflation.
> > Also I understand the USD was fixed to gold AND silver, a bimetalic
> > standard, where the metal of lower value could be used to redeem
> > currency (some economists are now advocating bi-currency backed currency
> > boards, so that the value of the currency would be worth the lesser
> > valued of the two backing currencies, e.g. a currency board issuing
> > currency redeemable for either 1 USD or 1 euro).
>
> Sure, it wasn't 100 years of perfect smoothness (but generally,
> yes). But if you look, you'll find short periods of price and
> interest rate volatility caused by government. Like the localized
> (a few states), so called "Wild Cat Banking Era".
>
> > > Today in the US both interest rates and inflation are higher,
> > > with the Fed (started in 1913, the same year they started
> > > the income tax).
> >
> > Growth is much higher also. Are nominal variables more important than
> > real variables?
>
> Real variables. How much of the US's GDP growth rate, in the last
> 10 years, is real wealth being created? I don't know but it's not
> 100%. Time will tell. A lot of what's going on right now in the
> US is plain 'ol consumption provided by debt. Taking on debt to
> create more wealth is one thing. Taking it on to consume is another.
To the extent that output growth has occured by an increase in the
capacity utilisation, the growth is less a growth in supply and more a
growth in demand. In the last decade the US unemployment rate has fallen
substantially and capacity utilisation has increased. But over a decade
this effect is not major. Most economists think that the sustainable
real GDP growth rate of the USA is at least 4% p.a. All GDP growth is
actual growth of production, but not all of it is sustainable. This
implies that growth must ease back to avoid aggregate demand growing
faster than aggregate supply and generating (or increasing the rate of)
inflation.
david
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