tag:blogger.com,1999:blog-17232051.post6306919735351421754..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: Did nominal interest rates fail to spike during the run on the Franc?Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-17232051.post-23769836596356978122013-11-01T09:03:49.016-04:002013-11-01T09:03:49.016-04:00And that is how scholars correct their work and mo...And that is how scholars correct their work and modify their conclusions when presented with new information. Thank you, gentlemen, for a brilliant example of economics as a not-so-dismal science.Ann Edwardshttps://www.blogger.com/profile/04644303974065183711noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-15532835578167670382013-10-30T21:15:48.202-04:002013-10-30T21:15:48.202-04:00The French economic system at the time was a sleep...The French economic system at the time was a sleepy backwater. Most Frenchmen kept their francs in their mattress. Americans were amazed to find that the French still crossed their checks. I had to look it up in a 19th century business reference book. It was dying out in the US in the 1880s as best I can tell. Crossing a check was writing a sort of endorsement across the front at a right angle to the main body of the check (with the "pay to the order of") that stated that the payment would only be made at a particular bank branch. Yup, not every Frenchman accepted new fangled ideas like having a check clearinghouse.<br /><br />If you think finance and the economy are two different animals today, you haven't studied early 20th century France.Kaleberghttps://www.blogger.com/profile/05283840743310507878noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-57224025069364042802013-10-30T01:59:37.463-04:002013-10-30T01:59:37.463-04:00Well, if Krugman is so amenable to correct his err...Well, if Krugman is so amenable to correct his errors, will he correct the misleading impression he gave that it was the gold standard, rather than restrictive US banking regulations, which was the cause of the 19th century US banking panics?<br /><br />Krugman wrote:<br /><br />"Now, the gold bugs will no doubt reply that under a gold standard... there wouldn’t be major financial crises. And it’s true: under the gold standard America had no major financial panics other than in 1873, 1884, 1890, 1893, 1907, 1930, 1931, 1932, and 1933. Oh, wait."<br /><br />http://krugman.blogs.nytimes.com/2012/08/26/golden-instability/<br /><br />Steve Horwitz's reply:<br /><br />"The federal and state governments played a huge role in the banking industry and it was those regulations that were responsible for the pre-Fed panics. <br /><br />The two most relevant regulations were: 1) the prohibition on interstate banking, which created overly small and undiversified banks that were highly prone to failure; and 2) the requirement that federally chartered banks back their currency with purchases of US government bonds, which made it prohibitively expensive to issue more currency when the demand rose, leading to the currency shortages and resulting panics that culminated in the Panic of 1907."<br /><br />http://www.freebanking.org/2012/05/14/krugmans-misreading-of-us-banking-history/John Snoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-62163611590555682712013-10-29T16:00:30.202-04:002013-10-29T16:00:30.202-04:00And notice how Krugman reacted instantly to this s...And notice how Krugman reacted instantly to this suggested correction and is not, like Alan Greensoan and various other VSPs insisting that he got it perfectly right from the get go.<br /><br />This little incident, almost as much as anything else, tells you who is your real Daddy when it comes to Econ.<br /><br />And kudos to Cohen-Setton for setting up the chain of events that made it happen.billybloghttps://www.blogger.com/profile/15924924162345348781noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-4274398199125150592013-10-29T14:46:36.399-04:002013-10-29T14:46:36.399-04:00Krugman is revising his paper.
http://krugman.blo...Krugman is revising his paper.<br /><br />http://krugman.blogs.nytimes.com/2013/10/29/french-interest-rates-in-the-1920s/?_r=0Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-80559323557474168542013-10-29T14:39:12.830-04:002013-10-29T14:39:12.830-04:00France suffered 6 million dead and wounded in Worl...France suffered 6 million dead and wounded in World War One. That's more than one male out of three. Or more than one male of working age, out of two. <br />To use a country that has suffered such a trauma and economic shock in any general theory is fraught with a massive, intrinsic error. This is exactly the sort of outlier that ought to be eliminated from general consideration.<br />http://patriceayme.wordpress.com/2013/10/29/united-stasi-of-america/Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-26203125617350796482013-10-29T13:49:36.373-04:002013-10-29T13:49:36.373-04:00"What actually happened was a sharp fall in t..."What actually happened was a sharp fall in the franc, substantial inflation, but no interest rate spike and a quite good performance in terms of real output."<br /><br />According to Michael Bordo's dataset nominal GDP increased at an average annual rate of 19.3% from 1921 to 1926. According to Angus Maddison's dataset real GDP increased at an average annual rate of 7.6%. Thus the GDP implicit price deflator rose at an average annual rate of 11.0%. <br /><br />It seems to me that Krugman is right. Any increase in nominal interest rates is too trivial to be considered a "spike" given the steep rise in prices.Mark A. Sadowskihttps://www.blogger.com/profile/08259309059705236763noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-17589545561093014442013-10-29T12:51:49.020-04:002013-10-29T12:51:49.020-04:00Would the consol be influenced by the inflation Kr...Would the consol be influenced by the inflation Krugman mentioned?SRdVhttps://www.blogger.com/profile/02926003339750066184noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-6885040674806131992013-10-29T10:39:16.137-04:002013-10-29T10:39:16.137-04:00Good catch, Krugman should revise his paper and ei...Good catch, Krugman should revise his paper and either justify his choice or use the more commonly used benchmark.Anonymousnoreply@blogger.com