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PeakTrader:

The Scientific Method of NeoClassical Economics is the dominant form of economics in the U.S., which includes Keynesian economics, i.e. the “Neoclassical Synthesis.” You’re talking about pre-20th century Austrian Economics.

U.S. per capita real GDP growth has been much faster after the Federal Reserve and Keynesian economics than before.

Average annual U.S. per capita real GDP growth

1913-2012: 2.04% (after Fed – 100 years)
1813-1912: 1.38% (before Fed – 100 years)

1936-2012: 2.38% (after Keynes General Theory – 77 years)
1859-1935: 1.26% (before Keynes General Theory – 77 years)

Source: Census data and the BEA.

Also, it should be noted, trade deficits subtract from GDP. Moreover, I’m sure, I don’t have to explain the power of compound interest.

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Pat says: "I guess you’ve never heard, ‘Post hoc, ergo propter hoc.’?"

I guess you never heard of anything that causes economic growth?

For example, economic boom/bust cycles (not to be confused with asset booms and busts) are inefficient both in the boom and bust phases, because of periods of strain and slack. They’re similar to feasts and famines or floods and droughts, to use some analogies. Sustainable growth is optimal growth.

The Fed has become increasingly better at smoothing-out business cycles, both short-term and long-wave, particularly, since the U.S. went off the gold standard. Before the Fed, economic boom/bust cycles were much more frequent and severe, resulting in suboptimal growth to a much larger extent:

List of recessions in the United States – Wikipedia

Recessions in the Industrial Revolution – 1871-1914

Period – Percent Decline of Business Activity

1873-79 – 33.6%
1882-85 – 32.8%
1887-88 – 14.6%
1890-91 – 22.1%
1893-94 – 37.3%
1895-97 – 25.2%
1899-00 – 15.5%
1902-04 – 16.2%
1907-08 – 29.2%
1910-12 – 14.7%
1913-14 – 25.9%

Recessions in the Information Revolution – 1982-2007

Period – Percent of Contraction

1990-91 – 1.4%
2001 – 0.3%

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