The Great Depression Analysis
WHAT ECONOMISTS DO
Economists have an image of practicality and worldliness not shared by physicists and poets.
Some economists have earned this image.
myself and many of my colleagues here at Chicago--have not.
Others--
I'm not sure
whether you will take this as a confession or a boast, but we are basically story-tellers, creators of make-believe economic systems.
Rather than try
to explain what this story-telling activity is about and why I think it is a useful--even an essential--activity, I thought I would just tell you a story and let you make of it what you like.
My story has a point: I want to understand the connection between changes in the money supply and economic depressions.
One way to
demonstrate that I understand this …show more content…
money supply.
I think I know how to do
this, though I'm not absolutely sure, but a real virtue of the democratic system is that we do not look kindly on people who want to use our lives as a laboratory. So
I will try to make my depression somewhere else.
The location I have in mind is an old-fashioned amusement park--roller coasters, fun house, hot dogs, the works.
I am thinking of Kennywood Park
in Pittsburgh, where I lived when my children were at the optimal age as amusement park companions - a beautiful, turn-of-the-century place on a bluff overlooking the Monongahela River.
If you have not seen this
particular park, substitute one with which you are familiar, as I want you to try to visualize how the experiment I am going to describe would actually work in practice.
2
Kennywood Park is a useful location for my purposes because it is an entirely independent monetary system. the park.
One cannot spend U.S. dollars inside
At the gate, visitors use U.S. dollars to purchase tickets and
then enter the park and spend the tickets. many tickets per ride.
Rides inside are priced at so
Ride operators collect these tickets, and at the end
of each day they are cashed in for dollars, like chips in a …show more content…
Now how does all of this look from the point of view of
the operator of
a ride or the guy selling hot dogs? Again, there will be a variety of reactions. In general, most operators will notice that the park seems kind
of empty, for a Sunday, and that customers don't seem to be spending like they usually do.
More time is being spent on 'freebies', the river view or
a walk through the gardens.
Many operators take this personally. Those who
were worried that their ride was becoming passe' get additional confirmation. Those who thought they were just starting to become popular,
and had had thoughts of adding some capacity, begin to wonder if they
Economists have an image of practicality and worldliness not shared by physicists and poets.
Some economists have earned this image.
myself and many of my colleagues here at Chicago--have not.
Others--
I'm not sure
whether you will take this as a confession or a boast, but we are basically story-tellers, creators of make-believe economic systems.
Rather than try
to explain what this story-telling activity is about and why I think it is a useful--even an essential--activity, I thought I would just tell you a story and let you make of it what you like.
My story has a point: I want to understand the connection between changes in the money supply and economic depressions.
One way to
demonstrate that I understand this …show more content…
money supply.
I think I know how to do
this, though I'm not absolutely sure, but a real virtue of the democratic system is that we do not look kindly on people who want to use our lives as a laboratory. So
I will try to make my depression somewhere else.
The location I have in mind is an old-fashioned amusement park--roller coasters, fun house, hot dogs, the works.
I am thinking of Kennywood Park
in Pittsburgh, where I lived when my children were at the optimal age as amusement park companions - a beautiful, turn-of-the-century place on a bluff overlooking the Monongahela River.
If you have not seen this
particular park, substitute one with which you are familiar, as I want you to try to visualize how the experiment I am going to describe would actually work in practice.
2
Kennywood Park is a useful location for my purposes because it is an entirely independent monetary system. the park.
One cannot spend U.S. dollars inside
At the gate, visitors use U.S. dollars to purchase tickets and
then enter the park and spend the tickets. many tickets per ride.
Rides inside are priced at so
Ride operators collect these tickets, and at the end
of each day they are cashed in for dollars, like chips in a …show more content…
Now how does all of this look from the point of view of
the operator of
a ride or the guy selling hot dogs? Again, there will be a variety of reactions. In general, most operators will notice that the park seems kind
of empty, for a Sunday, and that customers don't seem to be spending like they usually do.
More time is being spent on 'freebies', the river view or
a walk through the gardens.
Many operators take this personally. Those who
were worried that their ride was becoming passe' get additional confirmation. Those who thought they were just starting to become popular,
and had had thoughts of adding some capacity, begin to wonder if they