The Long Depression is proof positive that we don’t need the Fed.There are some who like that era so much they'd argue we don't need airplanes, penicillin, or internet either. To each his own, but most people prefer the modern age. Sure, there was a lot of romance to the era of the wild west, but actual records show that while the western states were really not all that lawless, the nation as a whole was not all that economically stable and prosperous either:
Even a 140 years later the era is controversial and the NBER folks still maintain that the Oct. '73 to Mar '79 stretch was a contraction. That may be because of the big hit wage growth took (and it wasn't helped by deflation), or it might be because of sub-par production. Regardless, the U.S. may have had a couple more spurts of below average growth left in it--
--but by '06 Chase & Morgan told the president that they were neither interested nor able to keep up the old 'bail-out-America' routine that the feds were depending on. Moving over from Morgan-Chase money to Fed money took a couple decades but since the FMOC in the '30's and monetary policy defined in the '40's we've been enjoying faster and more dependable growth than the bad old '1800's.
You know I love the modern world. Don’t be facetious. It’s tedious and distracting. I believe you are mis-measuring. What’s the cause of the deflation?
For instance, is it the fact that Rockefeller was able to lower the prices of oil distillates like kerosene over and over again? In 1865 a gallon of kerosene cost 58 cents. By 1880 a gallon cost only 9 cents.
Deflation doesn’t necessarily hurt savers, producers or even workers. If labor pricing falls 25%, but so do prices, net/net workers are just as well off as before the deflation. Arguing for a managed economy isn’t an improvement. It is enabling government abuse via confiscatory taxation/regulation and debt.
What’s the driver of deflation? How did they get growth and deflation? A lot of the evidence points toward improving productivity. Volatility and creative destruction are the hallmarks of a free market. We want innovation. Government controlled economies end up with markets skewed by regulatory capture in favor of big business. Your chart of “inflation” isn’t measuring real contraction given the fact that GDP/capita growth continued. Keep in mind that we experienced massive immigration during the same time pushing labor pricing down.
This time period is also one of broad industrialization in the US. I think productivity gains explain much of the so-called deflation. Productivity gains are the good form of deflation.
The Fed has missed again and again starting with the Great Depression. Its actions benefit the creditor class and big government, the two main clients of the Fed. I’m not a goldbug, but the Fed isn’t independent.
Here we have a period of very low to negative inflation driven by productivity gains and rising per capita GDP. What’s not ideal about that?
An a logical analyst of what is and isn’t you shouldn’t be so casually dismissive. We know that central planning doesn’t work for fiscal or regulatory policy. Why should monetary policy be different?