Monday, January 7, 2008

Samuel Brittan and the gold standard

There's a debate going on today about inflation and the previous gold standard on some message boards on the Net. I gumshoed around and found some of the papers by British financial guru Samuel Brittan.

His main web page is this. His work appears to address mainly British monetary policy, and right now British currency, as well as the Euro, are strong relative to the US Dollar, so it is the US, with the unmet spending for the War in Iraq and unconvincing oil policy, that is really having problems. But, for the record, one paper of particular interest is "The Old Stagflation Dilemma Again," from July 2007, here. For example, about Britain he writes: "In the UK the cost of living was highly stable from 1846 to 1914. Yet this long-term stability masked very sharp year-to-year movements. The cost of living fell by more than 12 per cent in 1846 and rose by a similar amount in 1853. In 1900, the last full year of Queen Victoria’s reign, prices rose by 8 per cent; and they fell by more than 2 per cent in 1908. These fluctuations provided a safety valve against short-term pressures..." In supporting the idea of the gold standard, he also says "US wholesale prices, for instance, increased by an annual average of only 0.1 per cent from 1879 to 1913."

Most of us have taken US History, and wondered how previous societies dealt with economic cycles. There have always been financial panics. Yet, the overall standard of prices seems to have been much more stable in the past, even if investments (like bank deposits) were at one time much less secure, before the New Deal. This always seems murky when presented to high school and college students today (even when writing exam question answers).

Also check "it's time to jettison the forecasts" here and "Business growth is not an end in itself" here. The dates on these articles seem to be in the wrong format.

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