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Quote of the Day: Ramaswamynomics
“During the only stable dollar eras of the last century, annual GDP growth averaged 4.9% in 1922-29, 4% in 1948-71, and 3.7% in 1983-2000. The volatile dollar from 2000 to 2022 saw average growth of a paltry 1.9%. Had the dollar remained stable since 2000, with an enduring 3.7% growth, the economy would be nearly 50% greater than it is today, and we would have avoided multiple financial crises along the way.” – Vivek Ramaswamy, The Wall Street Journal, 05/01/2023
That quote was from an article titled “Prosperity Requires a Stable Dollar,” which should be required reading for all Republican Presidential candidates.
Is it possible a major contributor to the current craziness is 23 years of bad economic policy? (Policy was better for a brief time during the Trump years, but Trump didn’t have to clear a high bar.)
For almost 20 years before the turn of the 21st century, the US dollar was stable and the economy prospered. Then a great devaluation started during the George W. Bush administration and continued through a good part of the Obama administration. The devaluations were off and on since then. The result has been slow growth and less opportunity for everyone. And this has been sold as the “new normal” with the implication that things can never be can better.
The Federal Reserve Board simply doesn’t know what to do, but it’s gonna do something anyway.
More from Ramaswamy’s article:
The global market will hang on every word of every FOMC press conference to see what a dozen central planners have to say. That won’t be because these planners have any special insight. Everyone will listen to see what the Fed may destabilize next.
Concurrent with the unstable dollar, our culture has accelerated toward bats*** craziness. Coincidence? Steve Forbes doesn’t think so:
Invisible and intangible though they may be, the effects of unstable money on the economy and the society can be devastating and long-lasting. They include widespread economic and financial distortions, sudden bouts of speculation and market volatility, and social unrest that if left unchecked, could undermine the very foundations of our society.
That was from Forbes’ book, Money: How the Destruction of the Dollar Threatens the Global Economy – and What We Can Do About It, another must-read, IMHO.
Mr. Ramaswamy’s odds of being the Republican nominee are not great, but I hope our eventual nominee will put him in charge of the Treasury. And then listen to him.
Conservatives used to be good at economics. We need to ignore the siren song of big government conservatives and get there again.
Otherwise, we become a socialist country run by angry trannies.Published in General
Angry trannies and AWFLs from academia.
His podcast is pretty in-depth, and interesting. Hope he can make it to a debate or two and show how it’s done.
There are three kinds of lies: lies, damned lies, and statistics. And politicians have honed lying to perfection. Let’s scrutinize just one pair of Ramaswamy’s cases, comparing the interval 1983-2000 (“stable dollar”) versus the interval 2000-2022 (“volatile dollar”). Of course, Mr. Ramaswamy never bothers to define what constitutes stable but, given the context of Fed monetary policy and mention of “the dollar’s real value,” we have to assume it has something to do with inflation. He discusses home prices (Case-Shiller index), domestic interest rates, and “real-dollar terms,” which all relate to domestic inflation.
In the 1983-2000 interval, the CPI increased at an average annual rate of 3.3%; the statistic for the 2000-2022 interval is 2.5%. Don’t like the CPI because, you know, they fudge it? No prob. Use the GDP deflator instead. The corresponding numbers are 2.6% and 2.2%, respectively. Note that the latter interval includes a couple of years of outlier Bidenflation. Leaving out 2021-22, the CPI and GDP deflator numbers are 2.0% and 1.9%, respectively.
Still not satisfied? Maybe Ramaswamy really means volatility rather than loss of value. So let’s compare the US dollar (USD) to that paragon of probity: the Swiss franc (CHF). The variance, normalized to the mean, in the 1983-2000 interval is 0.07 compared to 0.05 for the 2000-2022 interval. As you can see from the graph below, the 1980s was a very volatile time for the dollar, whereas the period 2000-2022 was initially a bit grim but then incredibly stable.
Thus, we see that GDP growth is negatively correlated with a stable dollar in this comparison by any measure: exactly the reverse of Ramaswamy’s claim.
It is left as an exercise to the reader to compare his other intervals. Spoiler: the 1948-71 interval fares little better.
So, carry on with Ramaswamy-worship. Just expect to be let down… again.
Anyone who’d like to read the WSJ piece in its entirety can use this link:
I think the strong dollar position is not the most important or central part of Vivek’s platform. Most people do not care or understand. But his OTHER positions are much more exciting.
I love Vivek, and hope he somehow becomes the nominee. Everyone should listen to him and give him a chance. He could rapidly become everyone’s second choice… which means if Trump somehow trips, he is possible. He will do a fantastic job in the debates if he can get on the stage.
One thing I love about him: unlike Trump and DeSantis, he is not petulant and refuses to go into hostile territory. He’ll debate anyone, anywhere, on any network. This approach already helped get Don Lemon fired. Anyone interviewing him is in serious jeopardy of humiliation.
Admittedly, as an outsider already, I am much less concerned about the fact that Vivek is a Hindu (Catholic-educated). I suspect many Christians in America would rather vote for Trump than Vivek on religious grounds. Which is pretty mystifying to me.
Apropos of nothing…
(See comment #4.)
What a greeting for a Monday morning.
How ironic. You talk about how people lie with statistics and then you prove it by reaching the above conclusion. You appear to be saying that the key to prosperity is an unstable dollar. Keep insisting on that and Biden might appoint you to the Federal Reserve Board.
I decided to address this one in a separate comment. You’re a class act @drlorentz. You don’t know me, and have no business making that comment.
I appreciate this information and will ask the editors to change the post accordingly.
Thank you @iwe!
Not sure who I am going to support yet, but I hope Vivek has a strong influence on the direction of the party. Particularly on economics.
Speaking of Hindu, I learned an interesting tidbit a few years ago. C.S. Lewis went on an extensive effort to find which, all of the religions out there, was the correct or true one. At one point in his research, he narrowed it down to two religions: Christianity and Hindu. Lewis finally chose Christianity, because there was a historical record to back it up.
Hello Misthiocracy has never!
It’s been a long time! It appears your chart is based on the CPI. Take a look at item #3 in comment #9. The CPI is ill-suited to tracking the real value of the dollar. Take a look at the price of gold instead.
The very left bar on your chart is interesting. That was when the Federal Reserve was created.
I like having Vivek in the debate, and I guess we can just use his first name for simplicity. Although I think Ramaswamy is easy to say, spell, and remember. I read half his book when it came out, and then felt like he lost me in the weeds. That may be a common sentiment. I hope his willingness to debate and talk to anyone enables him to get a strong and clear message out to persuadable voters.
This post is part of the Quote of the Day group writing project at Ricochet. Please join us and signup here for May!
I had fun coming up with “Ramaswamynomics.” Any chance it’ll stick?
Sorry, the name itself is easy enough, but the blend doesn’t quite roll of the tongue quite like Reaganomics.
Not once in the WSJ article does Ramaswamy mention gold. As I pointed out in my comment above, he does mention items related to prices. There is zero basis for your attribution re: gold anywhere in the piece.
Since Ramaswamy never defines his use of the term “stability” we can’t be absolutely sure what he intends. This is no accident and is a feature of the slippery nature of political rhetoric; this way politicians can never quite be pinned down if challenged. This thread is a testament to the success of this technique.
As already noted, gold is never mentioned by Ramaswamy so that has the weakest empirical support. Yet all four of your points rely upon gold, including complaint about CHF. On the other hand, Ramaswamy listed several markers of price stability, which I mentioned in my original comment. You chose to ignore those in favor of your gold narrative, about which you seem rather single-minded. While gold bugs occasionally have some useful insights, they tend to have blinders on — much as cryptocurrency fans do.
Obviously, I am making no such argument. I merely observed that, not only do the statistics not support Ramaswamy’s thesis, they support the opposite one. Therein lies the dishonesty of his article. At best, it means is that his methodology is flawed, to the extent that there is a properly formulated thesis in the first place (which there is not).
Please do not put words in my mouth and top it off by a gratuitous ad hominem. It’s unbecoming.
Aww, shucks. 😉
Why does the debt to GDP go up constantly? Is everybody immoral and stupid or is it “the system?” How does the average person supposedly progress in this system?
Also, very interesting.
Oh, the family!! Why isn’t anybody procreating W-2 slaves?!!
Ramaswamy didn’t mention gold, but the arguments he presented are exactly the same as they would be if he did.
The measure he did mention was the basket of commodities used as a measure by the Federal Reserve board during the 1983-2000 time frame. The result of that approach was a relatively stable gold price. Ramaswamy also mentioned CPI and PCE but disputed their usefulness as a measure of the dollar’s value.
To keep the conversation moving forward, let’s stipulate that Ramaswamy wasn’t talking about gold, and it was a coincidence that the prosperous periods he cited were concurrent with a stable gold price.
You could say that correlation does not mean causation, but I gather that you’re disputing the correlation. (Am I putting words in your mouth again?)
During the “incredibly stable” period, the price of gold went from $449/oz. to $1,990/oz. today. It peaked at $2154 in 2011. (Oops. There’s my “single-mindedness” again.)
If the dollar were truly stable during that period, it would have to mean that the real value of gold rose by a factor of 4.43.
What caused this change in the real value of gold? Was there a shortage? Did William Devane cause it? I don’t know what happened to that basket of commodities cited by Ramaswamy, but I’ll bet it went up in price at a similar rate.
Or maybe the real value of gold didn’t change, but the dollar did.
Ok. I’ll plead guilty to putting words into your mouth. Here’s your chance to set the record straight and tell us what you meant by the opposite of Ramaswamy’s thesis. The key word being “opposite.”
Also, speaking as single-minded Ramaswamy worshipper, I’ll stop the ad hominem when you do.
This is an interesting comment. Depressing, but interesting. Any chance the House’s debt ceiling plan would put a dent in it?
I am not crazy about Luke Gromen’s solution. That kind of thing has been done before, sometimes at the prompting of the International Monetary Fund (IMF.) It consists of the government impoverishing the public to pay off its debts.
I posted that just because it’s remarkable education. The problem is, unless we develop cold fusion, what else can we do?
The reason the debt to GDP keeps going up is because of inflation. The whole system is set up to need indiscriminate debt growth until everything collapses.
I think we should have switched to a deflationary system after the Soviet Union fell. It’s really volatile in the short run, but in the long run, it has all kinds of advantages. Who in the hell wants anything to go up in price? Why should anything go up in price consistently? Instead, we whine about globalized labor and free trade.
Capitalism and free trade are forcing prices down on most things all the time.
But we need constant inflation for some reason that isn’t clear. lol
So people complain about global trade and importing cheap labor.
If we ran with a half a percent deflation all of the time, labor would be replaced by capital slower. We could import all of the bodies we need to take care of the unfunded liabilities. Nobody would care about globalized trade.
If you throw a bunch of money on your mattress, they keep devaluing it. This is a constitutional taking.
Now we are so hooked on inflation, we can’t change it. This means everything is going to blow up at some point.
Constant deflation would make lending harder. It would lower GDP, but we wouldn’t be having all of the problems we are having today.
If you’re talking about deflation due to increased efficiency, I’m on board. Don’t worry folks. Your property values won’t be affected by increases in efficiency.
Monetary deflation, on the other hand, would not be a good thing.
If you don’t have a central bank creating inflation all of the time, that’s what happens. That’s what I mean. Even zero would be better than anything positive. We won’t do this, of course. lol
Sadly, I think you’re right.
The guy in that video says on the federal level every single thing will fall apart without inflation. I asked him about it, and he said that it’s been that way since 1971, and possibly 1946. The government will fall apart without the taxes generated from inflation. You can’t keep doing that, unfortunately.
People whine about everything, but I think 0% inflation is the place to start. That’s where the bad morals and bad decisions start.