One thing Gittins doesn't mention is the fact that government was a much smaller part of the economy in the depression era. When the private sector starts shedding jobs en masse, the public sector can maintain employment and in turn help maintain some demand.

One thing he says that I do take issue with is the concept of "re-loading" during good times. I take that to mean that he thinks federal government should accrue as big a surplus as possible. If that is what he means, then I disagree completely.

This has no application to the fiat monetary system that he nevertheless recognises we have moved to. It may be applicable to a housheold to save up $AUSD for the unknown future but the budget of a government that presides over a modern day fiat monetary system does not function remotely like a household budget.

Running a surplus does not create any kind of saving. There is no stock of saved up dollars derived from taxation or other revenue sources. Quite the contrary, all that occurs is a net drain of $AUSD from the economy, necessitating increasing private leverage as the growth driver.

Every time the federal budget is placed in surplus, the private sector as a whole goes into defict. And vice versa.

But I am digressing now. I agree with the authors general outlook here but disagree that we should re-peg our currency. We should keep floating exchange rates.

Grim your post.. is just fluff, whimsy and no substance. When you manage to rise above gingos I will respond.

Slasher , Friday, 20-11-2009 “why then under the Bretton Woods Regime did the value of world exports increase by 119% from 1950-1960.”

Slasher Sunday, 22-11-2009 “1950-73 bretton woods period export growth 10%, gdp about 5%”

(I did not realize we were discussing GDP I thought the topic was exchange rates, not that their difference would be discernible to slasher)

1950-1960 119% and 1950-1973:10% - slasher would have us assume 1960-1973 is negative and I just do not think so.

Like is said previously, in slashers case, an ear:arse transplant is what is needed.

For anyone who remembers, the method of fixing exchange rates was for each nation to purchase back excess funds from the market and release additional funds when their national balance of payments favoured it.

So what happens… people in economies like the UK end up being taxed more to fund additional reserves to buy back surplus pounds as well as dampening domestic demand (stagnation) and in 1970s, with socialists at the helm a crisis nearly destroyed the UK economy, due to government restraints on peoples earnings, a price freeze on retail products, even a prices commission to qualify every price change.

I can only assume Ken McKay and other “thinkers” (HA HA), who would risk the return of such barbaric interventions in peoples lives, feel such an outcome for their hubris, is worthwhile because I do not.

They simply presume to know better than “the market”, by seeking to impose a fixed exchange rate system based on ideological dogma.

Someone should remind them, another aspect of fixed exchange rates is, when a nation cannot sustain its fixed position (as again happened in UK in 1970s) – it was forced to adjust the “fix” and when that happens, speculation becomes rampant.

“Fixed exchange rates” were just a stepping stone from the old gold standard toward floating exchange rates.

col, you obviously cannot read graphs, i used your source to demonstrate that growth in exports was higher during the bretton woods period than the post bretton woods period, also using your sources to demonstrate higher gdp during the bretton woods period, care for the trifecta average unemployment rates?

If you played soccer your goalkeeper would hate you.

now the austrians and peter humes, they should stick to waltzes
never the let the facts get in the way of a fairystory
"Government control of the money supply is always inflationary."
Well here are some facts, deflation in the USA and UK from 1875-1896, deflation in US in 1836 of 30%, Hong Kong had deflation from 1997-2004 and Japan from the 1990s
Please stop reading books with pictures peter

yabby, the problem with floating exchange rate is that it looks like the magic pudding in providing automatic stabiliser but it isn't because it stops necessary economic reform.
its like the bloke who eats junk food all day and does not exercise, but relies on getting a personal loan for some liposuction. next year he has to go back for another loan to fund the plastic surgery.
every time we rely on market adjustment to currency value to correct imbalance we shy away from making the tough decisions necessary for the long term, we exascerbate current account imbalances and some day we will need to pay the piper.