In talking with people about the Federal Reserve, they say that it has allowed higher rates of GDP growth. This seems to be born out when I check the historical GDP growth rates. I know that current GDP rates are exaggerated now because inflation is not adequately accounted for, but what would you suggest I see or charts to look at which show that there was better growth rates during earlier periods of sound money. Or am I wrong in my assumptions that our best growth rates occurred during periods of sound money?
Perhaps take the 60 day or so moving average in the price of gold and use it as your divisor for converting everything into gold value instead of dollar value.
You have to remember that in the 20th century, we have had higher rates of innovation than in previous centuries. Higher growth rates in the 20th century are probably due to this phenomenon.
Political Atheists Blog
The most obvious problem is that growth as measured by GDP is not always good. The government has accounted for an increasing share of GDP over the last century in the U.S. Furthermore, there is a large quantity of professions that are oversupplied due exclusively to government regulations or interventions such as Accountancy, Auditing, Lawyers, the military, etc. You would have to categorise all economic activity either as generally beneficial; or as vampiric and siphoning off resources that are then misallocated. This would be a very hard task and would involve tons of work and sifting through data. For example, consider protectionist measures that raise the price of imported apples well beyond domestic prices. If before, people could buy 5 foreign apples with a dollar, now they can only afford 2 local ones. Yet the money is still spent, and is reflected exactly the same statistically, and the drop in living standards will go unnoticed in the data. In fact, since imports are counted as a negative in GDP, there would actually be a net increase in GDP as less apples are imported.
The problem of pinning the "true" rate of inflation to gold is very serious. Besides the numerous bubble-like spikes in the price of gold, especially in the 70's, it is generally unrepresentative of inflation since the fancies of investors as to the perceived level of inflation, or the perceived benefit of using gold as a store against it changed over time. A better measure would be a basket of goods, say, the average of gold and oil, or some such. I think I remember reading a financial article using just that to try to predict when a bust would occur.
And of course as Krazy Kaju said, the impact of technology and inventions being discovered and implemented at an accelerating rate is difficult to account for. Oh and for that matter, you want to measure GDP per capita, not just GDP, and then try to account for inflation. There's also the matter that both the population of the U.S. and the world is multiples bigger today than it was before, and the greater the population, the greater the potential division of labour, which rises in proportion to the size of the markets.
Which begs the question: when the world economy does in fact depress or change very negatively, then why would anyone ever believe an economist again? especially concerning the poor rate of explaining of past history and zero explanation of future context even using a suitable math model of any kind? The economist will surely only have a job to support the state position in power at the expense of liberty.