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This is an old revision of this page, as edited by 202.1.105.231 (talk) at 07:02, 24 August 2011 (→‎Article needs to be tagged as biased). The present address (URL) is a permanent link to this revision, which may differ significantly from the current revision.

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Dates of adoption of a gold standard

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Greenspan

Greenspan famously argued the case for returning to a gold standard in his 1966 paper "Gold and Economic Freedom", in which he described supporters of fiat currencies as "welfare statists" intent on using monetary policies to finance deficit spending. He has argued that the fiat money system of his day (pre-Nixon Shock) had retained the favorable properties of the gold standard because central bankers had pursued monetary policy as if a gold standard were still in place

This is confusing. Wasn't the US dollar currently (then) using a form of the gold standard? Why would he be arguing for a return? Was he arguing for a change to the current system in the US or for other countries to use gold directly rather then being tied to the US? Nil Einne (talk) 13:12, 28 April 2011 (UTC)[reply]

I just read the article. The above quote is wrong in claiming Greenspan argued for a 'return'. He is actually arguing for change to a "pure" version of the gold standard, one that is even more rigid that the pre WWII US government practices. Google the article, it is duplicated across the web and easily found. 203.9.151.254 (talk) 05:29, 6 July 2011 (UTC)[reply]

I have since removed the sentence He has argued that the fiat money system of his day (pre-Nixon Shock) had retained the favorable properties of the gold standard because central bankers had pursued monetary policy as if a gold standard were still in place because I can't see how the cited article supports it (particularly the 'his day' bit). Perhaps I misread it, but it sure don't seem to be in there. 203.9.151.254 (talk) 05:35, 6 July 2011 (UTC)[reply]

A 1966 paper would also be outdated if you are trying to argue against a floating exchange system since the world was using the Bretton Woods system then which was basically just a modified gold standard. — Preceding unsigned comment added by 202.1.105.230 (talk) 01:00, 16 August 2011 (UTC)[reply]

Terribly Keynesian bias

The sections on the Depression show a terribly Keynesian bias and I suggest that reference be made to Lionel Robbins's 1934 exposition of these events in his book The Great Depression. —Preceding unsigned comment added by 96.241.174.32 (talk) 15:51, 30 April 2011 (UTC)[reply]

I agree. Many of the sections, particularly those that discuss the benefits and criticisms of the gold standard, have a Keynesian/monetarist bias. There are several authors who would dispute the popularized statist views of these sections. Many of the statements are made as facts when the reality is that they are unproven theories which, according to the Austrian school, do not work. However, because of a general disinformation about economics and the pervasiveness of corporatist/socialist ideologies, such attitudes and bias pro or con a gold standard, various panics, and general economic thinking are hard to find in a neutral context. I think this article needs an "Undue" tag. Hradek (talk) 19:49, 5 August 2011 (UTC)[reply]

  • Yea this is horrific. If you take a minute to think about it, the criticisms of gold make no sense. Some of this can be cleaned up, but a lot of it needs more technical knowledge. I havent read my Rothbard and Paul yet.--Metallurgist (talk) 05:14, 11 August 2011 (UTC)[reply]
  • Does that mean if the media has a creationist bias, we have to report that too? Keynesianism has a well documented history of being completely false. I removed some parts that are easily proven false or misguided. Some of this is simple logic, others of it is proven. It is verifiable in that it is sourced. We could have split articles. "Keynesian view" vs. "Austrian view" But I would say thats utterly ridiculous since Keynesianism is usually easily refuted.--Metallurgist (talk) 07:13, 12 August 2011 (UTC)[reply]

globalize tag removed

Back in Jan 11 someone added the 'Globalize' tag, but did not give any mention of their reasons. I've hence removed the tag as I can't see what the problem is.

If someone still feels the article lacks a global view that's fine, but please explain your concerns on the discussion page. Please don't just whack a tag on the article and then vanish. 203.9.151.254 (talk) 05:23, 6 July 2011 (UTC)[reply]

Edited Advantages/Disadvantages section

I noticed there was a discrepancy between the advantages and disadvantages sections. The advantages section listed the purported advantages of the gold standard. The disadvantages section also listed the purported disadvantages of the system. But in the disadvantages section there were goldbug rebuttals to each point worked in. Either both sides should have rebuttals or neither should so I removed the rebuttals in the disadvantages side in interests of NPOV. — Preceding unsigned comment added by 216.236.252.231 (talk) 23:46, 9 August 2011 (UTC)[reply]

Disadvantages

The Disadvantages section has a lot of Keynesian theories that are easily shown to be mistaken.

  • "The total amount of gold..." This is a common Keynesian assertion, but it makes absolutely no sense when thought about. Murray Rothbard and Hans-Herman Hoppe have written about why its completely absurd. [1] and [2]
  • "Mainstream economists believe that economic recessions..." I can fairly easily present Austrian school criticisms of this view. There has not been any proof that stimulus fixes recessions. In fact, the evidence is to the contrary. The Great Depression was not fixed by stimulus (contrary to the common view) [3]. We can also look at the present recession, there are media that are reporting that the stimulus didnt work. [4] sort of goes into that.
  • "Monetary policy would essentially..." This is similar to above. Perhaps we can synthesize it all to say something like "Gold restricts the ability of central banks to modify the money supply, which is a tactic that Keynesians believe can reverse or soften recessions."
  • "Although the gold standard gives long-term price stability..." What does this even mean? It seems like another convoluted, contrived formula. I am still looking for an Austrian interpretation or response. This provides somewhat of a counter to the assertion that gold is volatile. I am sure there is a really good rebuttal to this bullet, but I am not well versed enough in Austrian and gold theory.
  • "Mainstream economists believe that a low,..." [5] might have some useful counters. But also, the central bank can get out of control, so asserting that steady inflation is good for the economy can be proven wrong with all the hyperinflations, and present inflation in the US.
  • "It is difficult to manipulate a gold standard ..." This is a rehash of the first bullet.

I think some of the bullets can be merged very easily. Others of them are nonsense, but there I step into OR a bit, altho there definitely are sources out there. Further, I think instead of using "mainstream", we need to use Keynesian or Monetarist, depending on where the claim comes from. Austrian economics is claimed to not be mainstream, but there have been many prominent Austrian economists and there are plenty of Austrian professors tenured right now. They are a minority, but how can there really be a mainstream in such a diverse, complicated, and contested field? This must be figured out.--Metallurgist (talk) 08:12, 12 August 2011 (UTC)[reply]

We gotta keep WP:DUE in mind. While some people might find what is written at mises.org quite sensible, it is still somewhat of a fringe sources. And as such it just doesn't work to base too much of this quite controversial section on that source. It will give people the wrong impression about how accepted various views are to let a fringe source deliver rebuttals to all the mainstream opinion. And about "mainstream economics" I think it's common parlance to talk about Keynesian and neoclassical economics as mainstream. Of course if some view is only shared by Keynesians or monetarists then we should specify that, but I don't think it is warranted to try to phase out the term "mainstream economics" given how often it is used by reliable sources.TheFreeloader (talk) 11:18, 12 August 2011 (UTC)[reply]
As a finance and economics joint specialist, I disagree with labeling these theories as specifically "Keynesian" or "Monetarist." If you take economics classes at any pretty much any university these kinds of things will be taught pretty much as the standard view of what is generally correct. Austrian School is definitely a fringe faction, although a very vocal minority. Also it seems to me that many people who associate themselves with Austrian School either don't have a formal background in economics or seem to have first studied philosophy, sociology or some other social science. Of course this is just an unverified observation on my part. 114.86.202.166 (talk) 15:18, 15 August 2011 (UTC)[reply]
Wikipedia considers Austrian economists to be a minority group and not a fringe group. 71.184.188.254 (talk) 17:34, 22 August 2011 (UTC)[reply]
Academia considers them a fringe. Austrian school has become popular with alot of people because real economics is very mathematical and uses abstract models that are difficult to understand where as Austrian school basically just relies on reasoning based on "common sense." Anyways, I guess my main point would be that in the academic world Austrian school really has a small presence and many criticize its credibility so I don't think it should have its own sections on articles on Wikipedia. There are many other minority schools of thought that should not be included either but since the people who support Austrian school are so vocal you will see people arguing to put in Austrian school viewpoints but not supporting other ones. 202.1.105.231 (talk) 03:05, 23 August 2011 (UTC)[reply]
The wikipedia article on Austrian Economics states that they are a minority group. If wikipedia states that they are a minority group then for wikipedia purposes they are a minority group and not a fringe group.71.184.188.254 (talk) 14:11, 23 August 2011 (UTC)[reply]
The wiki article on Schools of Economic Thought lists no less then 15 "current" Schools of Economic thought. I doubt that any single one of them can claim to be a "majority" school since it is unlikely that a majority of economists support it. In other words they are ALL either minority or fringe groups.71.184.188.254 (talk) 14:20, 23 August 2011 (UTC)[reply]
Austrian economics is called a "mainstream" school. 71.184.188.254 (talk) 15:39, 23 August 2011 (UTC)[reply]
By whom? The Wikipedia article about it says that "From the middle of the 20th century onwards, it has been considered outside the mainstream".TheFreeloader (talk) 15:47, 23 August 2011 (UTC)[reply]
and in the wiki article on Schools of Economic Thought, the section "Viewpoints within mainstream economics" mentions Austrian School as one of those mainstream schools. http://en.wikipedia.org/wiki/Schools_of_economic_thought#Viewpoints_within_mainstream_economics

Mainstream economics encompasses a wide (but not unbounded) range of views. Politically, most mainstream economists hold views ranging from laissez-faire to modern liberalism. There are also divergent views on particular issues within economics, such as the effectiveness and desirability of Keynesian macroeconomic policy. Although, historically, few mainstream economists have regarded themselves as members of a "school", many would identify with one or more of neoclassical economics, monetarism, Keynesian economics, new classical economics, Austrian School, or behavioral economics.71.184.188.254 (talk) 17:17, 23 August 2011 (UTC)[reply]

A Google search of the terms "Austrian school of Economics" and "Keynesian School of Economics" shows more hits in google for Austrian School by a factor of 5. Austrian school got 540,000 hits and Keynesian School got 96,000. In googled web pages Austrian School is the mainstream while Keynesian is the fringe.71.184.188.254 (talk) 17:51, 23 August 2011 (UTC)[reply]
That might be because the Keynesian school is more often referred to as Keynesian economics. But it doesn't matter anyways, we do not decide anything based on Google search results here, we base our content what reliable sources tell us. And as opposed to the unsourced piece you cited, the claim that the Austrian School is heterodox/outside the mainstream is well sourced in most places. Here are some of the sources for the claim [6][[7][8][9].TheFreeloader (talk) 18:09, 23 August 2011 (UTC)[reply]
Do you honestly believe that 'historically, few mainstream economists have regarded themselves as members of a "school" ?' Macroeconomics is not a very old field, and back in the day you were pretty much either a neoclassical/classical guy or a Keynesian guy. In simplified terms, the main difference between the two was whether you assumed that price levels were sticky and that aggregate demand would adjust to clear the market or that aggregate demand was sticky and that price levels changed to return the market to equilibrium. This would be clearly conflicting so it would be difficult to identify as being both Keynesian and Neoclassical/Classical. Of course today its widely accepted that the assumption of a fixed price level is more relevant in the short run and the assumption of a fixed aggregate demand is more relevant in the medium to long run. If you still don't believe that economists identify with different schools of thought you should go read about the saltwater/freshwater split, Wikipedia even has an article on it.
Whether or not the words Austrian school of economics gets more hits on Google than Keynesian School of economics is not a good indicator of whether or not Austrian school is more mainstream. The basic macroeconomic models that most people learn are the same (IS/LM, AD/AS, Solow growth model, Phillips curve, Okun's law, Marshall-Lerner condition etc.), the main sticking points are on the assumptions that you use when applying them. The difference between Austrian economics is that it doesn't use models or empirical methods because it thinks that they are not useful and relies just on "reasoning" so it pretty much becomes philosophy. This is why it is considered a fringe faction among economics because the methodology it advocates is entirely unscientific.
Also to put in behavioural economics as a separate "school" of thought is like a mathematics professor saying that he is from the "linear algebra" or "partial differential equations" school of thought. Its more an area of study rather than a separate school of thought. Anyways most of this is beyond the point because this is not really a discussion board, but if you want to argue that Austrian school is not a relatively minor faction then provide reliable sources stating otherwise. 202.1.105.231 (talk) 06:45, 24 August 2011 (UTC)[reply]

Freeloader

wiki policy does not require proof of common knowledge like that Paris is in France or that tomatoes cost more in winter then in summer71.184.188.254 (talk) 17:07, 18 August 2011 (UTC)[reply]

WP:V requires all statements which get challenged to be supported by references. If the conclusions you make are so obvious, the writer of the source for the claim about short term price volatility would probably included them in his article.TheFreeloader (talk) 17:19, 18 August 2011 (UTC)[reply]
Do you actually require confirmation that agricultural commodities are more expensive "out of season" then when "in season"? Seriously? 71.184.188.254 (talk) 17:28, 18 August 2011 (UTC)[reply]
When you've got a good reference that makes the same point in relation to the gold standard, please re-add your material. Until then, it's unsourced commentary. Your arguement of common knowledge fails here - this isn't specifically about only agricultural commodities, but a much more general comment. Ravensfire (talk) 17:37, 18 August 2011 (UTC)[reply]
(ec)No, rather the claim I want verified is that the short term price volatility in the late 19th and early 20th in the US was created by swings in agricultural prices. And please wait until you have a source for that claim with adding the statement back in the article.TheFreeloader (talk) 17:40, 18 August 2011 (UTC)[reply]
Doesn't matter what year it is. Seasonal price variation of agricultural commodities has been present since agricultural products were first priced.
If you want to play hardball, I want verification that the author of that study on price variability removed the impact of agricultural price variability from his study and that the price variability he is talking about is wholly due to the gold standard. If it does not, then it is a flawed study and references to its conclusions should be removed.71.184.188.254 (talk) 17:48, 18 August 2011 (UTC)[reply]
I don't have to prove that what he is saying it true, I just have to prove that he said what he said. The first sentence of WP:V is: "The threshold for inclusion in Wikipedia is verifiability, not truth".TheFreeloader (talk) 17:54, 18 August 2011 (UTC)[reply]
and I have cited a source that states seasonal variability of agricultural products exists. Just out of curiosity. Do you want proof that seasons existed in the 1800's as well?71.184.188.254 (talk) 18:01, 18 August 2011 (UTC)[reply]
No, I want a source for the claim that swings in agricultural prices were the cause of the American short term price volatility during the time of the gold standard.TheFreeloader (talk) 18:04, 18 August 2011 (UTC)[reply]
and I want confirmation that the author on short term price variability removed the impact of seasonal agricultural produce price changes from his study and blames the gold standard ONLY for the remaining price variability. If he didn't do such a basic adjustment, then his study is flawed and should be removed as a refernce.71.184.188.254 (talk) 18:08, 18 August 2011 (UTC)[reply]
IP - please read WP:SYNTH, because that's what you've got right now. Also, please read WP:3RR. You are beyond 3 reverts at this point. Multiple editors have issues with your changes and there is some discussion happening. Do not, however, continue to force the information in when it's disputed like this. You will end up getting blocked. I'm leaving the same warning on your talk page. Ravensfire (talk) 18:19, 18 August 2011 (UTC)[reply]
Just out of curiosity, what do you claim I am synthesizing? That season exists? That agricultural commodities have seasonal prices variations? or what?71.184.188.254 (talk) 18:38, 18 August 2011 (UTC)[reply]
We do not need to judge the quality of our sources' methods. Only that they are reliable sources. Again we are going for verifiability, not truth at Wikipedia.TheFreeloader (talk) 18:21, 18 August 2011 (UTC)[reply]
Actually you do have to judge the quality of your sources. High quality sources are preferable to low quality ones, and properly performed studies are preferred to faulty ones. If they are faulty then by definition they are not "reliable". If there is a case to be made that a study is low quality or faulty then a counterpoint to that study should be added.
Again please provide evidenc3e that the study cited did in fact take into account seasonal price variation of agricultural products. If you cannot then the study is faulty and should be removed, or counterpoint language should be added.71.184.188.254 (talk) 18:32, 18 August 2011 (UTC)[reply]
No, the way to decide whether a source is high quality is not to make a judgment about its methods. Rather it is to look at nature of the publication. And I would say that an encyclopedia like Concise Encyclopedia of Economics is a pretty reliable source.TheFreeloader (talk) 18:56, 18 August 2011 (UTC)[reply]

IP - Please stop with the continual reverts. It's called edit-warring and you are WAY past the WP:3RR limit. You have multiple editors disagreeing with your change and giving you reasons why. You need to work on the talk page before pushing your change back in. I've left a warning on your talk page, I'll do so here. Do not revert this again. Discuss it here and get consensus.

I don't think Freeloader or I question that agricultural commodities have price fluctuations. I am chuckling a bit that we're talking about the US and you bring in a source with data from the Phillipines. Yes, that's called WP:SYNTH. You take unrelated facts to form a conclusion that's not supported by the sources. That's the problem we're having. Both periods mentioned in that section would have had price changes. Find something that would explain why the coefficient of variation was so much greater in one period than the other. Ravensfire (talk) 19:26, 18 August 2011 (UTC)[reply]

and in return I am chuckling at the fact that you didn't pick up on the fact that the Phillipines is a tropical country, has two growing seasons for a lot of crops, and still has a 25% price variance, while the US is temperate country, has one growing season and so has an even greater variance.
Now back to the subject at hand, is there any evidence that the study cited makes any effort at all to adjust for seasonal price variations in agricultural products. It compares price variations in a largely agricultural economy with a variations in a largely industrial one. A pretty pathetic study methodology. If it does not make adjustments then it as about as relevant to this article as stating that more Indian raids happened under the gold standard then under fiat. 71.184.188.254 (talk) 20:16, 19 August 2011 (UTC)[reply]
You didn't hear what I said about verifiability, not truth, did you? It really is of no important at all to us as editors how research has been done, as long as it is published by reliable sources.
But since you seem so interested in this subject, I will help you a bit in your studies. Here is a paper about price instability and the gold standard[10]. If you look at the charts toward the back of the paper, in the summary section, you will see that the uncertainty about inflation under the gold standard runs a lot longer (like 5 years+) than it would seem reasonable to attribute to seasonal swings in agricultural prices.TheFreeloader (talk) 22:16, 19 August 2011 (UTC)[reply]
You didn't hear what I said as well. Let me repeat: Is there any indication that the author claimed that the gold standard was responsible for those price variations. If he did claim that the higher price variations were caused by the gold standard, did he bother to check and remove the impact of other causes of price variations. If he did not then the all he said that there were different size variations and not that the change from gold to fiat has anything to do with reducing the size of the price changes. That is about as relevant to this article as stating that more people died of Indian attacks under gold then under fiat, that people were shorter under gold then under fiat, or even that peoples lives were shorter under gold then under fiat. All are true statements, all are VERIFIABLE statements and all are IRRELEVANT to this article.
The reference to price fluctuations seems to me to be nothing more then an attempt to "blacked by association". A well worn tool of biased editors and a reason to tag this article as biased.71.184.188.254 (talk) 13:30, 20 August 2011 (UTC)[reply]
For Wikipedia, that doesn't matter. Please see WP:RS and WP:V. Ravensfire (talk) 14:15, 20 August 2011 (UTC)[reply]
It does indeed matter as wiki has a BIAS policy. This portion of the article is both irrelevant or misleading. i.e it shows BIAS. I wish to add counterpoint language in order to reduce that BIAS. Failure on your part to allow this shows that you have OWENERSHIP issues. Last I checked that was a wiki no-no. BIAS complaints require the article to be tagged.71.184.188.254 (talk) 14:32, 20 August 2011 (UTC)[reply]
Irrelevant by what measure? It's a text about the subject at hand and published in publication with an editorial process and written by professor of economics specialized in writing about different monetary regimes, having published several books on the subject[11]. I fail to see how this by any measure specified in Wikipedia policy could be irrelevant.TheFreeloader (talk) 16:53, 20 August 2011 (UTC)[reply]
It is irrelevant if the price variation was not caused by the gold standard but was innate to the economy. The language in the article implies it was cause by the gold standard -- Notice that it is under "Disadvantages". So far no showing has been made that the author claimed these variations were caused by the gold standard and if you can't show that, then you either need to remove the language from disadvantages, or add a disclaimer that the author made no claim that this price variation was caused buy the gold standard. .71.184.188.254 (talk) 17:18, 22 August 2011 (UTC)[reply]
I'm sorry, I assumed you knew how to use the reference notes in Wikipedia articles. Here is a link to the sources for the statement[12].TheFreeloader (talk) 17:25, 22 August 2011 (UTC)[reply]
Repeating: I have already looked at that and as previously stated the author makes no claim that that price variation were caused by the gold standard itself. I have already pointed out that price variations in a largely agricultural economy are greater then in a largely industrial economy, i.e. the price of wheat, flour, corn, tomatoes, veggies, varies more then the price of a car, bus fare, a sofa, a gallon of paint, a CAT scan, filling out a prescription etc. etc. etc. 71.184.188.254 (talk) 17:47, 22 August 2011 (UTC)[reply]

Article needs to be tagged as biased

The failure of wiki editors to allow commentary in counterpoint to anti-gold standard language shows bias.

A tag should be placed on the article to reflect that fact.

I am also uncomfortable with the section purporting to show that the gold standard lengthened the Great Depression. Per language in that section the Great Depression was caused by the Federal Reserve and the US abandoned the gold standard in 1934. How can something that does not exist have any kind of influence on the US economy? 71.184.188.254 (talk) 18:24, 18 August 2011 (UTC)[reply]

The US didn't abandon the gold standard in 1934. Exchange regimes were pretty much based on gold in some form until 1971 when the Bretton Woods system stopped being used. — Preceding unsigned comment added by 202.1.105.231 (talk) 03:30, 22 August 2011 (UTC)[reply]
If a US citizen can not only be fined but also be imprisoned for owning a legal tender US coin then it is safe to say that a gold standard does not exist. A limited "gold exchange standard" was in effect after 1934 but a gold standard was not in effect.71.184.188.254 (talk) 17:10, 22 August 2011 (UTC)[reply]
As long as you are guaranteeing convertibility of currency to a set amount of gold which pretty much fixes exchange rates between countries it is a "gold standard." There is no such thing as a limited gold exchange standard because once you have fixed the amount of money to gold then the money supply is also tied to the supply of gold. The gold reserve act did not change the fact that the value of the dollar was still set at a fixed rate to the dollar, I think you are misunderstanding the meaning of that section. 202.1.105.231 (talk) 03:14, 23 August 2011 (UTC)[reply]
US citizens were not guaranteed convertibility and would get laughed at as they were shown the door, at any Federal Reserve or Treasury office, if they went in and demanded gold for their paper dollars. US citizens were subject to fines and imprisonment if they possessed what used to be legal tender US gold coins. That is plainly not guaranteed convertibility. What the US had after 1934 was a limited gold exchange standard with other nations. It is a "limited" standard because those that can take advantage of it are "limited in number". Even that was dropped by Nixon after the Fed and the US were in danger of running out of gold.71.184.188.254 (talk) 14:08, 23 August 2011 (UTC)[reply]
You're missing the point. The Federal Reserve still had to maintain a sufficient amount of gold to be able to exchange US dollars at 35$ for every ounce of gold. Since other countries also had fixed ratios of gold to currency this keeps exchange rates fixed between countries and the money supply fixed also. The effect on the money supply and the average person is basically identical. If anything this section is an argument against the gold standard since the US government had to intervene to raise the exchange rate of gold to US dollars from $20.76 to $35 an ounce. So they basically took this measure to give themselves the flexibility of basically implementing an expansionary monetary policy. And if you look at the historical GDP data, 1934 was basically the trough of the entire recession with GDP and unemployment improving in the years afterwards which would make it seem that there was a positive correlation with an expansion in the money supply and aggregate demand.

Bordo's Paper linked above

Bordo admits that he is comparing two economies of different composition and that the comparison is an "apples to oranges" one. His words, not mine, see bottom of page 3.

Bordo's paper was about how a properly applied fiat system could either "match" or provide superior inflation protection compared to a gold system. I.e. Bordo admits that gold is superior to an improperly applied fiat system. Also He makes no claims that ANY fiat system has been "properly applied".

Bordo also cites a paper by Sargent and Wallace who state that when commodities competes the one with the lower depreciation rate emerges as the commodity money. i.e. the one that loses value the slowest wins the contest and becomes money. That the free market prizes price stability, above all other considerations, in money is relevant to this article and should be included.71.184.188.254 (talk) 14:26, 20 August 2011 (UTC)[reply]

BTW: The term "coefficient of variation" (which is what the article cites) appears nowhere in the linked paper, is not explained, and frankly I don't think anyone has a clue what it means, except perhaps the author. Is the "coefficient of variation" 100% from a change from .1% to .2%? and is it only 20% from a change in inflation from 5% to 6%? If so, this is misleading, a small change on a small base, looks worse then a larger change on a much larger base. i.e. If the base is .1 and the change .1 (to .2) that's a 100% change. If the base is 5% and the change is 1% (to 6) then the change is only 20%. The size of the base is different by a factor of 50 (.1 and 5). An obvious apples and oranges comparison.71.184.188.254 (talk) 14:34, 20 August 2011 (UTC)[reply]
The coefficient of variation is a measure of dispersion in a data set compared to its mean.TheFreeloader (talk) 16:53, 20 August 2011 (UTC)[reply]
IP, you might want to consider a couple of statistics courses - the term is fairly common. Ravensfire (talk) 17:06, 20 August 2011 (UTC)[reply]
Considering I have a BS that includes third year college math, if I have a problem understanding that statement, so do 99.9% of readers. Again the linked paper above nowhere uses the term "coefficient of variation" and it is unclear what the author means by it. Please provide the paper where that coefficient is derived. 71.184.188.254 (talk) 17:06, 22 August 2011 (UTC)[reply]
The link to the source is in the article in the reference note for the statement of course. But here is the direct link [13]. The reason why the coefficient of variation is not explained in the statement, is that it is assumed that people who don't know about the concept will click the wikilink to get to article about it. That is how Wikipedia is usually written in general [14].TheFreeloader (talk) 17:19, 22 August 2011 (UTC)[reply]
I have already looked at that and as previously stated the author makes no claim that that price variation ware caused by the gold standard itself. I have already pointed out that price variations in a largely agricultural economy are greater then in a largely inductrial economy, ie. the price of wheat, flour, corn, tomatoes, veggies, varies more then the price of a car, bus fare, a sofa, a gallon of paint, a CAT scan, filling out a prescription etc. etc. etc. 71.184.188.254 (talk) 17:44, 22 August 2011 (UTC)[reply]
What do you mean he doesn't say the price variation was caused by the gold standard. He says specifically in the section evaluating the performance of gold standard that the economies under the gold standard experienced prices which were highly unstable in the short run because they were made vulnerable to economic shocks by the gold standard.TheFreeloader (talk) 17:54, 22 August 2011 (UTC)[reply]
IP, you need to read the source again. "But because economies under the gold standard were so vulnerable to real and monetary shocks, prices were highly unstable in the short run. A measure of short-term price instability is the coefficient of variation—the ratio of the standard deviation of annual percentage changes in the price level to the average annual percentage change. The higher the coefficient of variation, the greater the short-term instability. " The source, right before it uses the numbers, describes the effect (unstable prices) and the measuring stick (coefficient of variation) plus gives a decent description of the measuring stick and how to interpret it. Ravensfire (talk) 18:31, 22 August 2011 (UTC)[reply]
Bordo also said that comparing the gold standard economies with the industrial economies some 50 years after is an apples an oranges comparison (see the paper I was provided a link to). Above Bordo makes a Comment about the "ECONOMIES under the gold standard", and not about the gold standard. Again where did Bordo state that the price variation was DUE to the gold standard. As previously stated more people died from Indian attacks during the gold standard era versus the fiat era. Those deaths plainly were not caused by the gold standard. Similarly if Bordo fails to state that the price variation was CAUSED by the gold standard then you guys are putting words in his mouth. 71.184.188.254 (talk) 13:58, 23 August 2011 (UTC)[reply]
He says that the price swings in the economy wre caused by real and monetary shocks to the economies. And in the section above he explains that: "The fixed exchange rate [to gold] also caused both monetary and nonmonetary (real) shocks to be transmitted via flows of gold and capital between countries. Therefore, a shock in one country affected the domestic money supply, expenditure, price level, and real income in another country." So, the shocks caused the price swings, and the gold standard caused the shocks. I also think the fact that he mentions the short-run price volatility in a section for evaluating the performance of the gold standard should have been a pretty good clue that he thinks the gold standard caused the volatility, I mean, why else would he mention it there?TheFreeloader (talk) 15:06, 23 August 2011 (UTC)[reply]
Fiat also transmits monetary and nonmonetary shocks. A Federal Reserve statement has impact all over the world, the European debt crisis had had an impact in the US, the US housing crash has had an impact in Europe, etc etc etc. Any monetary system will transmit shocks. That does not mean it CAUSES those shocks. If your point is that a gold based system transmits shocks is a disadvantage, then you have to point out that fiat also transmits shocks. Anything else is biased language.71.184.188.254 (talk) 15:47, 23 August 2011 (UTC)[reply]
It isn't "my point", it's Michael Bordo's point. And if you have a problem with it, I think you should write to the publishers of The Concise Encyclopedia of Economics and require they redact their article. We cannot do anything about it. We just pass on whatever reliable sources have to say about a subject.TheFreeloader (talk) 15:54, 23 August 2011 (UTC)[reply]
Lets try this again. Does or does not a fiat system also transmit monetary and nonmonetary shocks. BTW: This is a yea or no question.71.184.188.254 (talk) 16:30, 23 August 2011 (UTC)[reply]
While this is an intriguing question with many interesting aspects to it, I will have to abstain from this sort of discussion. This talkpage is for discussing improvements to the article, not discussing the subject itself. That means discussing sources, not discussing whether they are right or not.TheFreeloader (talk) 16:53, 23 August 2011 (UTC)[reply]
You brought that last point up! I am still waiting for any reference that Bordo believes that higher price variations under the gold standard was caused by the gold standard itself and were not inherent properties of a largely agricultural economy.71.184.188.254 (talk) 17:07, 23 August 2011 (UTC)[reply]
I'm sorry I don't know how I can help you. You can lead the horse to the water, but you cannot force it to drink. I just wrote above how Bordo says that the gold standard caused shocks to the economy, and those shocks caused short term price volatility. Also, he put the part about the short term price volatility in a section evaluating the performance of the gold standard, and that would not make sense if he didn't believe that the price volatility and the gold standard were causally related.TheFreeloader (talk) 17:26, 23 August 2011 (UTC)[reply]
You can help me by removing the protection you had placed on the article so I can make changes.71.184.188.254 (talk) 17:34, 23 August 2011 (UTC)[reply]
and the statement you printed did not sat that the gold standard caused those shocks. Only that those shocks were "TRANSMITTED" Causing and transmitting are two different things. The fixed exchange rate [to gold] also caused both monetary and nonmonetary (real) shocks to be transmitted via flows of gold and capital between countries. Today's fiat also "transmits shocks" Just look at the recent stock market plunge partially caused by the transmitted shock of Europe's debt mess as one example.71.184.188.254 (talk) 17:39, 23 August 2011 (UTC)[reply]
The only way I can see what is stated article to make any sense is if Bordo is of the opinion that the gold standard caused shocks to be more frequent. Why else would he put anything about short term price volatility in the section on performance of the gold standard, if he didn't think the price volatility was causally linked to the gold standard. And again if you do not agree with the sources, this is not the forum to discuss that. About the first part, you will not gain anything from edit warring except more blocks. And if you want to edit semi-protected articles, you could just register a user. That would also give you a bit more privacy (without having your IP address shown everywhere).TheFreeloader (talk) 17:56, 23 August 2011 (UTC)[reply]
and as far as I can see, some editor saw something in Bordo's language that he wanted to see, but is in fact not there.71.184.188.254 (talk) 18:27, 23 August 2011 (UTC)[reply]
  1. ^ Kindleberger, Charles P. (1993). A financial history of western Europe. Oxford: Oxford University Press. pp. M1 60–63. ISBN 0-19-507738-5. OCLC 26258644.
  2. ^ Newton, Isaac, Treasury Papers, vol. ccviii. 43, Mint Office, 21 Sept. 1717.
  3. ^ "The Gold Standard in Theory and History", BJ Eichengreen & M Flandreau [15]
  4. ^ The Pocket money book: a monetary chronology of the United States. Great Barrington, Massachusetts: American Institute for Economic Research. 2006. pp. 4–6. ISBN 0-913610-46-1. OCLC 75968548. {{cite book}}: |access-date= requires |url= (help)
  5. ^ a b c d e f Encyclopedia:. "Gold Standard | Economic History Services". Eh.net. Retrieved 2010-07-24.{{cite web}}: CS1 maint: extra punctuation (link)
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