tag:blogger.com,1999:blog-1740670447258719504.post3157541640835444439..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Policy Precedents and the 1920sEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-1740670447258719504.post-65514284919344841982012-09-29T20:31:45.173-04:002012-09-29T20:31:45.173-04:00> I guess I don't understand what your conf...> I guess I don't understand what your confusion is.<br /><br />I read you passage again and I think I understand now. You're saying that after the Fed had successfully cut off inflation it cut rates afterwards. That makes sense.<br /><br />Currenthttps://www.blogger.com/profile/08645195276844244481noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-85595430486326596282012-09-28T20:21:22.617-04:002012-09-28T20:21:22.617-04:00I agree - OMOs "were known" before that....I agree - OMOs "were known" before that. I guess I don't understand what your confusion is.Daniel Kuehnhttp://www.factsandotherstubbornthings.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-14965504464036901682012-09-28T18:07:05.375-04:002012-09-28T18:07:05.375-04:00"That I didn't know for sure. They met th..."That I didn't know for sure. They met the 1920-21 depression with a rate hike, not because they were Austrians but because they were anticipating Volcker. If you want to call the rate reductions in 1921 a counter-cyclical response you're free to, but I don't think that makes much sense. I think it makes more sense to say that they broke the inflation and ended their policy of high rates, not that they broke out low rates to fight unemployment. So I don't see much precedent there."<br /><br />I don't understand this argument.<br /><br />Regarding OMOs, they weren't unknown before that. As far as I remember, Mises mentions in "Theory of Money and Credit" that the Bank of England had begun using OMOs in the 19th century.Currenthttps://www.blogger.com/profile/08645195276844244481noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-10845633141016602152012-09-28T12:59:07.176-04:002012-09-28T12:59:07.176-04:00Thanks Daniel (I sent you an email too). One quibb...Thanks Daniel (I sent you an email too). One quibble: You keep citing Bagehot, but there is a second clause of his famous dictum: "at a high rate of discount." That is certainly not what modern central banks do, and it didn't seem to be what they did in the early 1930s either. (Yes Fed raised rates in 1931 but that was presumably to stop outflow of gold once Britain went off gold standard and spooked world investors. Clearly they had tried to provide easier credit before then. Bagehot's philosophy was that you wanted to purge the unsound enterprises but provide liquidity to the sound but illiquid enterprises.)Bob Murphyhttps://www.blogger.com/profile/04001108408649311528noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-34701823778918535202012-09-28T11:42:47.132-04:002012-09-28T11:42:47.132-04:00You might note this point:
From July 1929 to lat...You might note this point: <br /><br />From July 1929 to late 1931, Fed holdings of treasuries increased about <i>fivefold</i>, and this was in a period of over two years.<br /><br />Yet in the year from 1923-1924, Federal Reserve holdings increased from $91 million in October 1923 to $585 million by October 1924. That was a <i>six-fold</i> increase over about a year, much more radical than the 1929-1931 program and in a shorter time too!Lord Keyneshttps://www.blogger.com/profile/06556863604205200159noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-28220658365913857632012-09-28T10:57:53.907-04:002012-09-28T10:57:53.907-04:00At what point in time did you decide that money su...At what point in time did you decide that money supply would be endogenous, Daniel Kuehn? Shortly after the Krugman/Keen exchange?Blue Auroranoreply@blogger.com