The good old days weren't always good, and tomorrow ain't as bad as it seems

As I believe Will Rogers once said, it ain't what we don't know that kills us; it's what we do know that ain't so. One of the reasons behind affection for the gold standard is the erroneous belief that during the era of the gold standard, the economy grew much faster than it does now.

Well, sometimes it did. It also shrank much faster than it does now. Under private or semi-private money, the economy tends to be much more volatile.

But on average, if you compare the two centuries, as I did using what primitive growth data we have for the 19th century, you'll see that there were spectacular years of China-style growth, but even more spectacular years of contraction. Recessions tended to be much longer, deeper, and more frequent than they are now.

But on average, the 20th century, with its Federal reserve and its fiat currency, grew not only more smoothly, but on average faster than the 19th. In 1800, real per-capita GDP was $1200 or thereabouts; at the turn of the 20th century, it was a little less than $5,000, a roughly fourfold increase. By comparison, between 1900 and 2000 real per-capita GDP went from $4,921 to $34,775, a sevenfold increase. Even if we chop off the first half of the 19th century, to put us squarely in the industrial revolution, 20th century growth still looks better. If fiat money is killing us economically, it's sure a slow-acting poison.

Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well. Bestselling author Mark Bittman teaches James Hamblin the recipe that everyone is Googling.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register.

blog comments powered by Disqus

Video

How to Cook Spaghetti Squash (and Why)

Cooking for yourself is one of the surest ways to eat well.

Video

Before Tinder, a Tree

Looking for your soulmate? Write a letter to the "Bridegroom's Oak" in Germany.

Video

The Health Benefits of Going Outside

People spend too much time indoors. One solution: ecotherapy.

Video

Where High Tech Meets the 1950s

Why did Green Bank, West Virginia, ban wireless signals? For science.

Video

Yes, Quidditch Is Real

How J.K. Rowling's magical sport spread from Hogwarts to college campuses

Video

Would You Live in a Treehouse?

A treehouse can be an ideal office space, vacation rental, and way of reconnecting with your youth.

More in Business

Just In