A dozen years ago, I shared an edited-for-readability chat I had with a friend on the gold standard.
In it I stated:
I’d think that it would be better to keep the mountains and valleys more stable / less high|deep, so that slowdowns aren’t felt by a disproportionately small community/niche of the economy, and so that speed-ups can have a “good neighbor” effect to bringing some of the underperforming sectors ‘along for the ride’
His previous question, “How can we be certain that’s a good thing? Maybe the cycle of mountains and valleys is important, socially?” stood unanswered.
I’ve become ever-more-convinced over the last nearly-decade that boom-and-bust cycles are mandatory for a healthy economic environment.
Most aspects of your life happen in boom-and-bust cycles (learning, muscle building, relationships, and on and on).
Especially after watching the craziness of the covid19 responses over the last year+, I believe I can say with 100% certainty that organizations like central banks trying to drive the economy with monetary policy anf interest rate hi-jinks is universally bad.
My economics professor years ago described the Fed’s job as “operating a bus by lying on the floor, looking at a mirror on the ceiling, watching out the back window – telling the driver to go ‘left’ or ‘right’ based on how far away from the double-yellow line you were 9 months ago”.
Al Van Derzee was a smart man.
from antipaucity https://antipaucity.com/2024/01/20/bring-back-boom-and-bust/
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