Ideal Taxes Association

Raymond Richman       -       Jesse Richman       -       Howard Richman

 Richmans' Trade and Taxes Blog



Money Supply during the Great Depression
Howard Richman, 2/27/2011

In Friday's posting, I compared the U.S. economy of 2010 to 1937, but the more accurate comparison is to 1936. As shown in the graph below, real GDP growth slowed in 1937 and it went into a double dip in 1938:

realgdp19291941.gif

In 1936, the Federal Reserve overly expanded money supply. This resulted in increasing inflation in 1937, so  in 1938, the Federal Reserve clamped down so much on money supply that it actually caused deflation and negative growth, as shown in the chart below:

Money Supply and Inflation
Year 2010 1936 1937 1938
Change in M1 (Money Supply Measure) 8.2% 14.3% 4.4% -1.3%
Change in M2 (Money Supply Measure) 3.4% 11.3% 5.1% -0.4%
Inflation Rate (Consumer Price Index) 1.5% -1.0% 3.5% -1.8%
GDP Growth Rate 2.83% 13.5% 5.12% -3.44%

If 2010 is indeed like 1936, we can expect inflation to take off in 1937. This could cause a clamp down on money supply by the Federal Reserve in 2012, which could cause the economy to experience a double-dip.

[Note: I found the money supply and inflation statistics for the Great Depression here.]

Your Name:

Post a Comment:


Comment by Caed rigdon, 4/19/2013:

you're an idiot

 

Response to this comment by FDR, 5/3/2013:
#truth




  • Richmans' Blog    RSS
  • Our New Book - Balanced Trade
  • Buy Trading Away Our Future
  • Read Trading Away Our Future
  • Richmans' Commentaries
  • ITA Working Papers
  • ITA on Facebook
  • Contact Us > January 2010

    Categories:
    Book Reviews
    Capital Gains Taxation
    Corporate Income Tax
    Consumption Taxes
    Economy - Long Term
    Economy - Short Term

    Environmental Regulation
    Real Estate Taxation
    Trade
    Miscellaneous

    Outside Links:

  • American Economic Alert
  • American Jobs Alliance
  • Angry Bear Blog
  • Economy in Crisis
  • Econbrowser
  • Emmanuel Goldstein's Blog
  • Levy Economics Institute
  • McKeever Institute
  • Michael Pettis Blog
  • Naked Capitalism
  • Natural Born Conservative
  • Science & Public Policy Inst.
  • TradeReform.org
  • Votersway Blog
  • Watt's Up With That


    Wikipedia:

  • [An] extensive argument for balanced trade, and a program to achieve balanced trade is presented in Trading Away Our Future, by Raymond Richman, Howard Richman and Jesse Richman. “A minimum standard for ensuring that trade does benefit all is that trade should be relatively in balance.” [Balanced Trade entry]

    Journal of Economic Literature:

  • [Trading Away Our Future] Examines the costs and benefits of U.S. trade and tax policies. Discusses why trade deficits matter; root of the trade deficit; the “ostrich” and “eagles” attitudes; how to balance trade; taxation of capital gains; the real estate tax; the corporate income tax; solving the low savings problem; how to protect one’s assets; and a program for a strong America....

    Atlantic Economic Journal:

  • In Trading Away Our Future   Richman ... advocates the immediate adoption of a set of public policy proposal designed to reduce the trade deficit and increase domestic savings.... the set of public policy proposals is a wake-up call... [February 17, 2009 review by T.H. Cate]