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

More

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.

Jump to comments
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.

Get Today's Top Stories in Your Inbox (preview)

Is Technology Making Us Better Storytellers?

How have stories changed in the age of social media? The minds behind House of Cards, This American Life, and The Moth discuss.


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

Is Technology Making Us Better Storytellers?

The minds behind House of Cards and The Moth weigh in.

Video

A Short Film That Skewers Hollywood

A studio executive concocts an animated blockbuster. Who cares about the story?

Video

In Online Dating, Everyone's a Little Bit Racist

The co-founder of OKCupid shares findings from his analysis of millions of users' data.

Video

What Is a Sandwich?

We're overthinking sandwiches, so you don't have to.

Video

Let's Talk About Not Smoking

Why does smoking maintain its allure? James Hamblin seeks the wisdom of a cool person.

Writers

Up
Down

More in Business

Just In