Bob Murphy vs Fed Economist: Did the Fed Avert a Second Great Depression?

http://Mises.org

On Tuesday, March 23, 2010, the Federalist Society at Campbell Law in Raleigh, NC hosted a debate between Federal Reserve economist Matthew Martin and Robert Murphy of the Ludwig von Mises Institute. The topic was, Did the Fed avert a second Great Depression?

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[t3hsauce]

All FED economists are terrible speakers. Even if this idiot had any actual intellectual ammunition against Murphy, he would still lose the debate. Whenever he speaks I feel my eyelids becoming heavy.

[JessicaBelle81]

I swear my head was about to explode hearing that Fedster explain his rationale for counterfeiting and theft.

[Pingvinsvans]

@t3hsauce I agree he is not perfect but neither is he trying to degrade murphy, he seems honest and willing to debate, stop beefing with someone who gives austrians a chance to be heard!

[BlackSwanHunter]

the problem with keynesian economics is that when you explain it out loud and in plain english, it just sounds fucking dumb.

[jrbocane]

@debatefindstruth I mean, the federal reserves dropping the federal funds rate .5% DURING an expansion is just one of the reasons for the crash of '29. the real estate bubble of the twenties was mostly due to over speculation that real estate value will only continue to go up. Even when we on a gold standard, the US suffered deep depressions (go look it up) due to speculation and later deflation.

[jrbocane]

@michaelpshipley1 deflation is a problem for investment not because of "counterfeit credit" but because of an equation that Irving Fisher discovered, which is  r = i - pi^e. That is the REAL interest rate is the nominal rate, the rate the bank chargers less expected inflation. So what happens to the real interest rate if there is deflation? It increases. In the depression, real rates went up to 15% and Investment dropped considerably, until the FED expanded the money supply.

[debatefindstruth]

Sounds like a Milton Friedman argument.He was one of the greatest economist in the 20th century with his free market principles.But he did get it very wrong with his monetary policy.The boom in 27 was caused by the fed dropping interest rates and increasing the money supply. This led to the stock market bubble and crash.Then the regulations that only let banks have local branches which increased their exposer in a run. Without all the fractional reserve lending a run on the bank wouldn't matter

[appledapathy]

@jrbocane You have your facts so wrong...

[jrbocane]

2nd great depression? unemployment only reached slightly above 10.4%. The great depression is an example of the failure of the fed to act. with many bank failures, money dropped by around 25%, there was a 2-3 year period of deflation which caused real interest rate to skyrocket, crowding out investment. The fed should have increased the money supply sooner. When they finally did around '34 - '35, inflation went to 2%ish, unemployment began to decrease and real interest rates dropped.

[lavedon]

@rockandrock44 I agree

[rockandrock44]

Murphy did a good job, but I disagree with him on one point. Many Austrians agree with the Chicago School in their assessment of the deflationary monetary policy of the Fed in the 1930s, most notably the Free Banking School and the monetary equilibrium theorists. To me, they are more economically sound.

[rockandrock44]

Fed economist got completely owned.