PeakTrader.com

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PeakTrader:

Economics, e.g. monetary policy, microeconomics, international trade, etc., improved substantially over the past hundred years. I stated before:

Before the Fed, per capita real GDP growth averaged 1.36% a year from 1814-1910, and after the Fed, it averaged 2.13% per year from 1914-2010.

The Fed has smoothed-out business cycles, including long-wave cycles. Economic boom/bust cycles are inefficient, both in the boom and bust phases, because of periods of strain and slack (or feast and famine).

When the U.S. was on the gold standard, a fixed exchange rate system, basically had a closed economy, and a small economy at the height of the Industrial Revolution from 1871-1914, when the U.S. had deflationary growth, per capita real GDP growth averaged 1.56% a year.

However, when the U.S. went off the gold standard, had a flexible exchange rate system, basically had an open economy, and a large economy at the height of the Information Revolution from 1982-2007, when the U.S. had disinflationary growth, per capita real GDP growth averaged 2.22% per year, which doesn’t include up to $800 billion a year trade deficits (i.e. the U.S. consuming more than producing in the global economy and in the long-run).

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However, fiscal policy, which is controlled by politicans, has lagged other economic improvements substantially.

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It should be noted, the Great Depression worsened substantially, because the U.S. was on the gold standard, and the Fed had to tighten the money supply to compensate for foreign gold outflows.

Before the Fed, there were many periods of economic booms and busts.

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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ZORO:

No it hasn’t the severity of the business cycle has increased over the last 100 years.

http://www.cato.org/publications/working-paper/has-fed-been-failure

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PeakTrader:

Your statement is based only on an opinion paper. If you want to ignore rigor and reality, that’s your problem.

In the article, it’s incomplete at best to state: “(The Fed) has allowed the purchasing power of the U.S. dollar…to fall dramatically.”

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We can thank Wall Street for making the U.S. economy most energy efficient.

Wall Street, in the pursuit of profit maximization, directed and accelerated the offshoring of heavy U.S. industries and directed and accelerated capital into lighter U.S. industries.

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When it falls from 6.99 to 5.00, or two points, that’s roughly a 28% decline. When it fell from 15.41 to 11.00, or 4 1/2 points, that’s roughly the same 28% decline. It won’t fall to zero. Instead, it’ll become infinitesimally smaller, approaching the limit of zero.

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Padraeg, efficiency is expending increasingly less energy to produce increasingly more energy, for example. To produce output, energy is needed. So, the energy input won’t fall below zero.

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Chart:

http://www.aei-ideas.org/wp-content/uploads/2013/04/energy6.jpg

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http://www.aei-ideas.org/2013/04/chart-of-the-day-in-2012-the-us-had-the-most-energy-efficient-economy-in-history/#comments

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