PeakTrader.com

[administrator]

PeakTrader:

And yet some people ignore the tremendous improvements in economics over the past hundred years.

For example, crackpot libertarians want to get rid of the Fed, although 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.

Also, they want to free people from labor standards, e.g. the minimum wage, legalize drugs, adopt an isolationist foreign policy, etc.

It’s no wonder mainstream voters run away from them and to socialists.

******

Crackpot libertarians, who want to legalize drugs, make people like Obama look moderate.

******

If I committed a crime, I’d want a fringe libertarian on the jury, not because he totally believes in liberty, but because he completely ignores proof.

******

Vangel, the data contradict your assumptions.

For example, at the height of the Industrial Revolution, from 1871-1914, per capita real GDP growth was 1.56% a year. At the height of the Information Revolution, from 1982-07, per capita real GDP growth was 2.22% per year.

Under the Fed, purchasing power increased, because per capita real income growth was stronger.

******

Per capita real GDP growth after WWII between 1946-70 averaged 2.09% per year.

******

However, from 1946-70, the masses had greater prosperity, because real compensation kept up with productivity.

******

The real minimum wage is $3 an hour lower today compared to its peak in 1968, while per capita real income has more than doubled.

******

John Dewey, the Fed deserves tremendous credit for creating economic conditions to facilitate faster economic growth.

******

Brett, you can ignore the performance of the Fed and the data.

Obviously, the Fed smoothed-out both short-term and long-wave business cycles, which fostered faster economic growth.

We do know the country was on the gold standard in the 1930s and the Fed had to tighten the money supply in a depression to stop foreign outflows of gold.

******

Vangel, you need to understand an increase in net exports adds to GDP and an increase in net imports subtracts from GDP. Moreover, offshoring and then importing those goods at lower prices and higher profits subtract from GDP.

Furthermore, since the U.S. was on the gold standard also in the 1920s, accommodative monetary policy would’ve been needed to compensate for foreign gold inflows, to keep gold pegged at $35 an ounce.

You continue to blame monetary policy for the problems caused by fiscal policy. I’m sure, Obama would agree with you.

******

John Dewey, you’re confusing the benefit of raising living standards through international trade with how GDP is measured.

Y is domestic output or GDP in the equation: Y = C + I + G + NX, and NX is net exports.

When NX is positive, it adds to GDP. When NX is negative, it subtracts from GDP.

When NX is negative, the U.S. is consuming more than producing in the global economy.

For example, China’s GDP is high. However, NX is high, i.e. it exports much of its output.

When the U.S. uses China as a factory, to increase net imports, that subtracts from U.S. GDP.

******

John Dewey, you’re adding GDP to what’s already been added. What you say doesn’t add up.

---

http://www.aei-ideas.org/2013/06/there-are-no-natural-resources-only-raw-materials-all-resources-are-created-through-human-effort/#comments

---