The second volume is full of glory and splendor in the capital, and the spirit is full of vitality in the foggy city. Chapter 249: Water for the Foot (Part 2)
Subtitle of this chapter: Saint Seiya is coming, economics is over.
"Dr. Yuan, you're talking about oil, right?"
"BINGO!"
Our Master Yuan nodded to one of the two men who had just walked in. The gentleman was wearing round glasses and a goatee and said, "Dr. Irving Fisher, you're right. It's oil!"
Irving Fisher (1867-1947), a native New Yorker, earned his first PhD in economics from Yale University, but did so in the Department of Mathematics.
His doctoral dissertation, "A Mathematical Study of the Theory of Value and Price," which used quantitative analysis to study utility theory, remains a must-read for economists a century later. This dissertation established his position as the first mathematical economist in the United States.
MV=PT——Fisher equationIt is considered to be the E=MC^2 of economics.
Later economists called it a tool that revealed God's secrets, an academic atomic bomb. Milton Friedman, a leading figure in the Chicago School, built the magnificent edifice of monetarism from this equation. The Fisher equation is also the foundation of modern monetary and banking theory.
He was also the president of the AEA in 1918.
However, this guy's misfortune was caused by the Great Depression, not to mention the money issue.
On October 20, 1929, he made a prediction that the stock market had "reached a plateau which appears to be permanent."
On October 21, the New York Stock Exchange was hit by a massive sell-off as soon as it opened, with more than 6 million shares sold throughout the day. As a result, the stock market automatic recorder did not record the last transaction until 1 hour and 40 minutes after the closing.
On this day, he told the outside world that the stock market "is just adjusting on the edge of madness."
On October 23, the situation continued to deteriorate, with the New York Times Index falling 31 points.
He said that a meeting of Wall Street bankers unanimously agreed that "the value of the stock market is not exaggerated at all", implying that the stock market should continue to rise.
On October 29, he said...
By the way, that day was Black Tuesday, so he didn’t say anything.
However, he still refused to shut up after that and wrote "The Debt Deflation Theory of the Great Depression" and "100% Money". These two books claimed that the government and banks should strictly control the amount of money in circulation and even implement a 100% deposit guarantee system.
This is how the reputation of liberal economists was ruined by guys like Irving Fisher!
Yuan Yan suddenly glanced around at the economists in the room and gritted her teeth. "I'm going to find a way to make you all shut up when the time comes..."
"Economists' Flu" refers to a strange epidemic that occurred in New York in October 1929. Between September and October of that year, at the initiative of Mr. Yuan Yanshu, a global conference of economists was convened in Los Angeles. Leading economists from around the world attended this highly anticipated yet relaxed gathering.
The conference didn't have any particular theme; it consisted of academic exchanges and private meetings. Some called it more like a vacation than an academic conference. However, since all participants' travel expenses were covered by the conference committee, everyone considered it a great success.
However, after the meeting ended in early October, the economists who attended the meeting fell ill after returning home, with symptoms such as high fever and coma. The most seriously ill was Yale University professor Irving Fisher, who was in a coma for more than a month.
But by November, almost all the patients had recovered without any medication and had quickly recovered their health, with only two or three unfortunately dying due to old age or frailty.
They missed the last 10 black days of October and also missed the best opportunity to save the Great Depression.
Therefore, some people say that the Great Depression was a conspiracy by Mr. Yuan Yanshu, who deliberately summoned economists and made them sick to cause the Great Depression. Of course, this is a completely nonsense conspiracy theory.
At that time, there was a moderate outbreak of bird flu on the west coast of the United States, and it is likely that the attendees were accidentally infected, so it became known as the 'economist flu.'
——Excerpt from "SCP Encyclopedia: Economist Flu"
Our Master Yuan said to the crowd, "Gentlemen, I know it seems a little unbelievable now, but as an economist, you must have a forward-looking and global perspective..."
"The internal combustion engine revolution that began in the second half of the 19th century gave us access to cars. Before the last European war, the world's annual automobile production exceeded 500,000. And just last year, America alone produced over 2 million vehicles of all kinds!"
"What about in a few years? 3 million, 4 million, or even 5 million isn't out of the question."
In fact, in 1926, the world's automobile production exceeded 5 million, and the United States alone produced 4.3 million of the 5 million cars.
"It's also foreseeable that steam engines on trains and ships will eventually be replaced by internal combustion engines. By then, oil will be the blood flowing through the world's economic system. Without oil, there will be no international trade."
"In the chemical industry, petroleum is also the most important raw material. I believe that with the development of chemical technology, more artificial compounds can be extracted from petroleum, which will inevitably trigger a materials revolution!"
Thinking of petrochemicals, Yuan Yan suddenly thought of nylon, and when she thought of nylon, she thought of stockings, and when she thought of stockings, she thought of...
"Pika Pika."
"Master Ball, what's so naughty about that? I don't want to be a stockings dealer!"
"Host, what you are thinking about is not suitable for children, so this system will be blocked. Host, please pay attention..."
"Shut up!"
Our Master Yuan shook his head, shaking off the Master Ball's chatter and the inappropriate images. He then spoke passionately, "Think about it, gentlemen. Compared to gold, which can only be stored in a vault, isn't oil, which brings convenience and wealth to mankind, more qualified to be the monetary standard?"
OIL DOLLAR——Petroleum Dollar. If you are not a time traveler, how can you come up with such an advanced concept?
In the original timeline, it was not until the mid-1970s, when the Bretton Woods monetary system collapsed, that Dr. Henry Kissinger, an old friend of the Chinese people, was appointed as the US Secretary of State. His primary mission was to "guide" oil-exporting countries to accept the US dollar as the sole pricing and settlement currency for international oil transactions.
He succeeded, and through Saudi Arabia, he persuaded other OPEC members to finally make the dollar-oil "peg" a global consensus. Moreover, the US Treasury can buy oil by printing money, which is a privilege that no other country has.
The United States exports the virtual symbol of the US dollar in exchange for the injection of real resources such as oil. Other countries in the world use real goods and services to exchange for US dollars from the United States to purchase essential oil. These "petrodollars" are then converted into US stocks, treasury bonds and other financial assets in the form of reflux, filling the US trade and fiscal deficits and supporting the US economy.
The "petrodollar" made the United States achieve financial hegemony and gave it the real weapon to ultimately defeat the socialist bloc headed by the Soviet Union... Of course, a major country in the East also played a significant role.
However, in this timeline, he proposed the "petrodollar" so early, so why didn't the Master Ball pick up the card? Because...
"Dr. Yuan, you are indeed a science fiction writer admired even by Albert Einstein. You truly possess an extraordinary imagination. However, your imagination seems a bit too extraordinary when applied to economics."
Another middle-aged man in his fifties who followed Irving Fisher in couldn't help but interrupt him.
Yuan Yan took a quick look and asked with a smile, "Excuse me, are you Wesley Claire Mitchell?Professor?"
"It's me." The other party was stunned and asked with a little doubt: "Dr. Yuan, do you know me?"
"Professor Mitchell, how could I not know you, a famous Columbia University professor, and your NBER?..."
The “people” that Master Yuan is talking about are certainly not “people”.
He was a key figure in the institutional school and, like Irving Fisher, had made significant contributions to the quantitative school and the American statistical community. The two also had a good personal relationship, which is why they came together.
NBER is the National Bureau of Economic Research. Professor Mitchell is the current director of the bureau..
Although it is called "US XX Bureau", it is not a government agency like the FBI, but a private non-profit research institution.
In fact, NBER was founded by Professor Mitchell last year, and its first research project was national income and its distribution.
After that, NBER's main research project was to continuously revise Mitchell's own book, "Business Cycles", according to the development of economic reality, including revisions using national income data.
Over time, the NBER grew to include more than 20 research groups covering all aspects of economics. Over 30 Nobel laureates in economics and 12 chairmen of the Presidential Council of Economic Advisers (CEA) have served there.
It is worth noting that the person whom Incus listened to was the chairman of CEA under President Reagan, and the father of the supply-side school, Martin Feldstein, was the previous chairman of NBER.
He made an indelible contribution to the "success" of Thatcher-Reaganism and the resurgence of neoclassical liberalism.
Later, after Mises went into exile in the United States in the late 1930s, he accepted funding from the Rockefeller Foundation and worked in the NBER for a period of time.
The great economist Yuan thought to himself, those who know me would think I traveled to America in the early twentieth century, while those who don’t would think I traveled to a fairyland with many sects.
"Hahaha..." Yuan Yan laughed a few times and pointed at her head, saying, "Professor Mitchell is right. Maybe my imagination is too rich. But..."
His expression straightened, and he said in a deep voice, "Gentlemen, I am using my imagination to make a prediction. One day the gold standard will no longer be feasible, and when that time comes..."
“The only thing that can replace GOLEDN GOLD is BLACK GOLD!”
"Mr. Yuan Yanshu is considered one of the greatest economists of the 20th century. Some even argue that the word 'one' should be removed. Besides his immense contributions to neoclassical liberalism, he also made many incredibly accurate... terrifyingly accurate predictions about the future. Among them was the petrodollar.
As early as 1921, he anticipated the collapse of the gold standard not once but twice: during the Great Depression and after World War II. He also provided a prescription for using oil as a global currency.
According to his prediction, the eastern Mediterranean and the Persian Gulf became an extremely important region.
From then on, Yuan Yanshu instilled a view into the American economic and political elites: a unified and powerful political entity must not be allowed to emerge in that region, even an alliance based on a certain religion.
Therefore, it is very necessary for the United States and even the Western bloc to support a "heterogeneous" political entity in that region, that is, Israel.
Coincidentally, Adolf Hitler had the same idea during the heyday of Nazi Germany. Whether this was a result of his own strategic thinking or a reference to Mr. Yuan's theory, he ordered the deportation of a large number of Jews and their transport to Israel.
What is even more "coincidental" is that during the Soviet Great Purge, many Jews who were identified as "Trotskyists" and "internationalists" were also exiled by Stalin. These communists were naturally not welcome anywhere, and a large number of them had to go to their ancestral homeland.
The consequence of this was that after World War II, a quasi-red country emerged in the region. Its economic system was very socialist, and in the ideological field, the influence of atheists was also very strong.
These atheists not only suppressed Jewish fundamentalists in the country, but also began to spread atheism to their Semitic brothers.
Such behavior naturally made the local conservative religious forces extremely hateful, and they took the initiative to introduce the power of the Western world to counter the quasi-red Israel.
At the same time, the atheist Jews put aside their past grudges and began to cooperate with the Soviets.
So not long after, the first Middle East war broke out...
The petrodollar has indeed stabilized the economic situation in the free world, but it has also brought endless troubles, risks and even disasters to the world economy.
We can't help but wonder if Mr. Yuan Yanshu knew this at the time..."
——Excerpt from "Petroleum: Yuan Yanshu's Black Gold"》
