Please take a close look at the data from the Great Depression, before doing more posts claiming I don’t know the facts.
Mike Kimel continues to insist that I don’t know what was going on in 1933, a period I’ve spend 20 years studying. He insists that FDR’s dollar depreciation program began in October 1933, even though all economic historians agree in began in mid-April 1933, when the exchange rate for the dollar began declining (against gold and against other currencies.) He insists prices began rising before FDR took office off, which is not true. He presents a graph that he claims shows prices rising before FDR took office, but his graph shows inflation rates, not the price level. In fact, the graph actually supports my argument that inflation didn’t turn positive until after FDR took office. There’s a difference between the rate of inflation and the price level.
When I complained that Keynesian theory wasn’t able to explain the rapid inflation of 1933-34, a period of massive economic “slack,” he responded:
The problem for Sumner is that Keynesian theory is merely an extension of good old fashioned Adam Smith. Prices depend on supply and demand. You can have a good or service go up in price locally even as it goes down everywhere else.
Keynesian theory is just supply and demand? Then why not call it ‘Smithian Theory.’ In any case, I was discussing the overall price level, not individual prices. I could go on, but perhaps that’s enough.
PS. Ironically, his post is entitled “Scott Sumner digs deeper.”