What Has Happened to Consumer Prices Since Abandonment of the Gold Standard?

by Jan 8, 2013Liberty & Economy0 comments

Carmen M. Reinhart and Kenneth S. Rogoff presented a paper titled “Shifting Mandates: The Federal Reserve’s First Centennial” at a meeting of the American Economic Association on January 5. In it, they observe: Whatever the mandates of the Federal Reserve, it is clear that the evolution of the price level in the United States is dominated […]

Carmen M. Reinhart and Kenneth S. Rogoff presented a paper titled “Shifting Mandates: The Federal Reserve’s First Centennial” at a meeting of the American Economic Association on January 5. In it, they observe:

Whatever the mandates of the Federal Reserve, it is clear that the evolution of the price level in the United States is dominated by the abandonment of the gold standard in 1933 and the adoption of fiat money subsequently. One hundred years after its creation, consumer prices are about 30 times higher than what they were in 1913.

And here’s a graph they present to illustrate what that looks like:

cpi-history

They note that

the early Federal Reserve failed miserably at meeting its initial mandate of financial stability.

And that

not every credit boom ends in crisis but nearly all crises are preceded by credit booms.

Hmm…

(h/t Business Insider via Bob Wenzel.)

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