WTF Happened in 1971? (2019) • Hacker News Board

Re: WTF Happened in 1971? (2019)

#21

Post by definetheword » Mon, Nov 23, 2020, 4:56 PM UTC

mason55 wrote: post #12

ZacharyPitts wrote: post #10

Amazed that the site does not call out Nixon completely abandoning the gold standard in 1971. Financial investments thusly did not need to be backed by actual assets anymore, to the point of today where the whole of money is loans against loans against loans.

That’s the point of the site. It doesn’t say it explicitly but leaving the gold standard is the answer to the question in the URL

Ya, I recognized that it guides you to the conclusion:

- read first three graphs... "oh, yes, that looks like a problem"

- scroll next 5 graphs... "oh, looks like lots of evidence correlates to that year... what happened that year?"

- scroll next 5 graphs ... "oh, wasn't it the gold standard that year?"

- scroll to the end.. read quote .. "is this a bitcoin quote? No, someone else... wait, but who is River Financial and why do they want me to care"

Re: WTF Happened in 1971? (2019)

#22

Post by wyldfire » Mon, Nov 23, 2020, 4:56 PM UTC

Some of these graphs are laughable and are candidates for "Spurious Correlations" [1]. Childhood obesity is not due to the US getting rid of the gold standard.

[1] http://archive.is/9VFmh

Re: WTF Happened in 1971? (2019)

#23

Post by dexterdog » Mon, Nov 23, 2020, 4:56 PM UTC

I don't mean this to say that the women's liberation movement was a bad thing because it was not, but that started in the early 70s and had the effect of rapidly inflating the supply of educated potential white collar employees.

Re: WTF Happened in 1971? (2019)

#24

Post by icameron » Mon, Nov 23, 2020, 4:56 PM UTC

A lot of charts with no context, but my main takeaways are that the US is not in record debt, in fact it was well over 100% GDP in WWII and under that now. Based on the news you'd think US is over spending by records numbers. The numbers are records but as a percentage of GDP they are not. Another surprise is the S&P PE ratio. I thought it was really high now, but actually 2008 was the high point by about twice as much. Again, no context in the article, but these were my takeaways. All the other charts are saddening. Maybe the point is sow fear uncertainly and despair to pump bitcoin?

Re: WTF Happened in 1971? (2019)

#25

Post by bryanlarsen » Mon, Nov 23, 2020, 4:56 PM UTC

The author obviously wants you to believe that it was the abandonment of the gold standard, but there are several other theories that have more credence with mainstream economists.

The early 70's was the start of a horrible period of stagflation: stagnation coupled with inflation. Some do blame the loss of the gold standard, but the leading theory is the OPEC oil crisis. Others blame market regulations, the EPA was passed in 1970; the late 60s and early 70s saw many financial and environmental regulations passed.

I like the oil price theory. The period of growth was a period of massive decline in the price of energy. We've since had 50 years of stagnation in energy prices. But that looks to be breaking now. If solar energy & battery prices continue to decline the way they have been, we could see energy prices decline at a rate reminiscent of Moore's law.

And energy is a massive component in the price of almost everything we consume.

Re: WTF Happened in 1971? (2019)

#26

Post by bobcostas55 » Mon, Nov 23, 2020, 4:57 PM UTC

Nothing, these charts are just the result of picking the wrong deflator. This chart shows what happens when you use the (correct) GDP deflator: https://worthwhile.typepad.com/.a/6a00d83451688169e20134878d...

Re: WTF Happened in 1971? (2019)

#27

Post by rtkwe » Mon, Nov 23, 2020, 4:57 PM UTC

driverdan wrote: post #11

The inflection point in most of these charts happen after 1971, many closer to 1980.

Looking at economic graphs is hard because it’s laggy. The problems that lead to 2008 were a gradual accumulation through the preceding 10-20 years.

Re: WTF Happened in 1971? (2019)

#28

Post by mikey_p » Mon, Nov 23, 2020, 4:57 PM UTC

Didn't the Powell memo happen in 1971 as well?

Re: WTF Happened in 1971? (2019)

#29

Post by akhilcacharya » Mon, Nov 23, 2020, 4:58 PM UTC

triangleman wrote: post #9

Love the charts, then scroll to the bottom and "oh, Bitcoin". Sorry but there are other ways. Did you know that the Balanced Budget Amendment (proposal) failed by a single vote in 1995?

Can't even imagine what current economic recovery would look like if we had a Balanced Budget Amendment under President Ross Perot in '95.

Re: WTF Happened in 1971? (2019)

#30

Post by parhamn » Mon, Nov 23, 2020, 4:58 PM UTC

Sort of related: Is there any measure for cost-to-innovate out there?

I’m also curious whether there was a ton of low hanging fruit for innovating/organizing/sciences that we plucked. The “first 90% is easier than the second 90%” kind of thing.