All - Has anyone heard of the AIER (American Institute for Economic Research) before?
aier.org
By 1933, the magnitude of the Great Depression suggested the need for a research organization to inquire into the wide range of economic, social, and monetary developments that had contributed to the catastrophic economic contraction. The hope was that by further developing and applying modern scientific procedures of inquiry, results could be obtained that would be useful to the Nation in avoiding a repetition of the disaster. On the advice of Dr. Vannevar Bush, then vice-president of the Massachusetts Institute of Technology, Col. E. C. Harwood founded the American Institute for Economic Research to conduct the necessary research.
Initially AIER was housed in the office of a staff member at the Massachusetts Institute of Technology, but soon expansion required more space. For several years the Institute occupied buildings in Cambridge, Massachusetts that it also soon outgrew.
At the end of the Second World War, Col. E. C. Harwood and Helen Harwood investigated the potential of several "white elephants" in Berkshire County, Massachusetts as a new home for AIER. After successful negotiations, they moved operations to Great Barrington. After several month of preparing the new location, AIER resumed full operation at its new location with plenty of room for future expansion.
And expand it did. By 1956 subscription and booklet sales had outgrown its allotted space. In 1957, the mailing and printing were transferred to an annex. In 1958, a warehouse was added to the annex to accommodate increasing volumes of paper, envelopes, and mail.
To accommodate the expansion of research staff, students, and books, in 1962 a research library was added to the hillside below the annex. Now known as the E. C. Harwood Library, the 10,000 square-foot building contains AIER's principal offices.
In 1993, a comprehensive renovation was undertaken to accommodate the demands of the "computer age." With the installation of new hardware and software, AIER's computerized research facilities now employ "state of the art" information technology, including on-line access to most major libraries in the United States.
AIER's independence from special-interest groups - and its close attention not only to proposed solutions of fundamental economic problems but also to useful procedures of inquiry into those problems - makes AIER unique among economic research organizations. AIER's long-run success attests the need for economic research carried out in such a manner. With all the problems our Nation currently faces as we enter the new century, AIER's research is as important now as ever.
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E.C. Harwood
(1900-1980)
Col. Harwood, a graduate of the United States Military Academy, was serving in the Army Corps of Engineers in the 1920's when he undertook as an avocation the intensive study of economics, with particular emphasis on money-credit problems. He began with economic texts by authors whose names began with "A" and exhausted a library in less than three years. He found chaos among economists' views arising from semantic mires and pre-scientific notions about human "knowledge."
He next began intensive study of what philosophers and logicians had said about knowing, finding there, too, muddled inquiries. Some American philosophers, Charles S. Peirce and William James, were different and had broken with ancient traditions by incorporating scientific procedures. Later, John Dewey and Arthur F. Bentley furthered scientific analysis with their development of a "transactional" approach to "problem solving." Since its beginning, AIER has recognized the importance of developing and adhering to such useful procedures of inquiry as antecedent and inseparably linked to inquiry in all fields, including economics.
In 1928 and 1929 Col. Harwood warned in several articles published in the financial journals that the speculative "boom" then underway was attributable primarily to the excessive creation of purchasing media and that the failure to stop the inflating process would lead the a major "bust."
By 1933 the magnitude of the Great Depression suggested the need for an independent research organization to inquire into the wide range of economic, social, and monetary developments that had contributed to the catastrophic economic contraction. Col. Harwood deemed necessary that such an organization avoid financial dependence on a few individuals or groups with pet panaceas or special interests. Vice President Vannevar Bush of MIT suggested that an independent research organization offering its results directly to the public might be possible.
With $200 Col. Harwood began operations in 1933. Since its inception, the Institute's publications have enjoyed a wide sale, and thousands of Sustaining Members provide a financial base for its work.
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December 2001
The Business Cycle Dating Committee of the National Bureau of Economic Research has determined that a peak in business activity occurred in the U.S. economy in March 2001, ending the longest expansion in U.S. history at exactly ten years and marking the starting date of the tenth post-war recession. Whether this recession will be extraordinarily long or deep remains to be seen.
Each month, one of our Research Reports articles is devoted to current business-cycle conditions. Each of these monthly discussions includes a full set of charts of AIER's primary leading, coincident and lagging statistical indicators. We also produce two charts that aggregate the movements of the 12 leading indicators. We often publish these two charts with the monthly report, however, space does not always permit them to be included. So, for our readers who would like to see these charts every month, we have them posted here.
AIER's Percentage of Leading Indicators Expanding
Each month the AIER staff meets to discuss and appraise each one of our 24 statistical indicators. These appraisals are based upon probabilities that are calculated each month. These probabilities help us determine whether a series is likely to be cyclically expanding or cyclically contracting. Using these probabilities each series is then appraised as either clearly expanding, probably expanding, cyclically indeterminate, probably contracting, or clearly contracting.
The percentage of leading indicators expanding is calculated by adding the number of leading indicators appraised as expanding or probably expanding cyclically, dividing that figure by the number of leading indicators for which a cyclical status is evident, and multiplying the result by 100. Series for which the cyclical status is indeterminate are disregarded. For example, if nine of the twelve primary leaders are clearly or probably expanding cyclically, one is clearly or probably contracting, and the cyclical statuses of two series are indeterminate, we divide nine by ten (total number of primary leaders for which the cyclical status is apparent), which equals 0.90. This number multiplied by 100 equals 90. Therefore, we would report that 90 percent of the primary leading indicators with an apparent cyclical trend are expanding.
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AIER's Cyclical Score
As the percentage of leading indicators chart above shows, there were several periods where the series gave a false prediction of a recession. Although the procedure for calculating the percentage of leaders expanding is straightforward, it does not allow for any "shades of gray." Each series must be accorded a specific cyclical status each month and a series reaching a new high for the cycle has the same "weight" as one that has decreased for several months and is on the verge of an indeterminate status.
As a result, AIER developed an alternative measure of the primary leading indicators called the Cyclical Score. Although it too theoretically can fluctuate between 0 and 100, it differs from the percent expanding series in several respects. The cyclical score is a purely arithmetical calculation that does not reflect the judgments of AIER's staff in any way. Also, it is based on the current list of primary leaders each month. This means that the data for, say, August 1972, reflect all historical revisions and may include series that were not on the list of primary leaders then. Consequently, the historical record of the cyclical score may itself be revised whenever a series is revised or one series is dropped and another substituted. The percentage expanding series is, in contrast, a record of the monthly findings of AIER's staff based on the leading series then in use and then available.
As with the percentage expanding series, the cyclical score can range from 0 to 100. A score below 50 indicates that a recession is probable. We rely on the cyclical score primarily to supplement the percentage expanding series. For example, if the percentage of leaders appraised as expanding indicates that a recession is probable, but the cyclical score of the leaders does not, we would be somewhat hesitant in asserting that a recession is imminent. On the other hand, if both series were to decrease to less than 50, we would be somewhat more confident in offering such an appraisal.
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The Statistical Indicators
The Primary Leading Indicators
M1 Money Supply
M2 Money Supply
3-Month Percent Change in Sensitive Materials Prices
New Orders for Consumer Goods
Contracts and Orders for Plant and Equipment
New Housing Permits
Ratio of Manufacturing and Trade Sales to Inventories
Vendor Performance, Slower Deliveries Diffusion Index
Index of Common Stock Prices
Average Workweek in Manufacturing
Initial Claims for State Unemployment Insurance
3-Month Percent Change in Consumer Debt
The Primary Roughly Coincident Indicators
Nonagricultural Employment
Index of Industrial Production
Personal Income in Manufacturing
Manufacturing and Trade Sales
Civilian Employment as a Percentage of the Working-Age Population
Gross Domestic Product
The Primary Lagging Indicators
Average Duration of Unemployment
Manufacturing and Trade Inventories
Commercial and Industrial Loans
Ratio of Debt to Income
Percent Change from a Year Earlier in Manufacturing Labor Cost per Unit of Output
Composite of Short-Term Rates
Learn More About Our Forecasting Method
For those who are interested in learning more about our method of business-cycle forecasting, we have a whole booklet dedicated to the topic. The booklet is Forecasting Business Trends and sells for a price or $5.00 postage paid. If you are interested in ordering this booklet, please fill out an order form, and mail or fax it to us. The order form asks for an abbreviation which for this booklet is BT.
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Gold and Liberty
Contents
INTRODUCTION
A Strange New World -- Without Gold Money
Gold is a Precious Metal
The Modern Appeal of Gold
Gold and Economic Freedom
I. THE ORIGINS OF GOLD AS MONEY
The Convergence on Gold
Gold as the Money of Choice
Currency Units as Fixed Weights of Gold
Gold as an Objective Value
The Alleged "Mystical Qualities" of Gold
Gold and Exploration
II. FREE BANKING AND GOLD
Private Mints
Money Changers and Goldsmiths
The Evolution of Free Banking
Free Banking and Economic Development
Free Banking in History
Myths About Free Banking
III. THE GOLD STANDARD IN THEORY
A Standard of Value
Like No Other Commodity
The Golden Constant
The Economics of Gold Mining
Prices, Cycles, and Growth Under the Gold Standard
Public Finance Under the Gold Standard
IV. THE CLASSICAL GOLD STANDARD
A Gold Coin Standard
How the Classical Gold Standard Worked
Free Banking versus Central Banking
A Century of Sound Money
Economic Effects of the Classical Gold Standard
International Economic Integration
V. INTELLECTUAL AND LEGAL ISSUES
The Meaning of Gold
Gold and Property Rights
Constitutional Aspects of Gold
Gold and Liberty
The Imposition of Legal Tender Laws
The Criminalization of Gold Ownership
VI. SUBVERSION OF THE GOLD STANDARD
The Monetary Dissolution of World War I
The Gold Exchange Standard
Gold and the Great Depression
The "Gold Shortage" Myth
Government Defaults on the Gold Standard
The Bretton Woods System and Its Aftermath
Recent Failed Attempts at Unified Money
VII. CENTRAL BANKING AND GOLD
Central Banking: A Form of Central Planning
The Incompatibility of Central Banking and the Gold Standard
The Destructiveness of Inflating and Deflating
Modern Defenders of Central Banking
VIII. GOLD AS A BAROMETER AND INVESTMENT
The Gold Price: A Barometer of Paper Money Values
The Price of Gold: The London "Fix"
Gold as an Investment: Coin, Bullion, and Mining Shares
Are You as Smart as a French Peasant?
Relative Returns from Gold and Financial Assets
Misconceptions About Gold's Investment Performance
Gold in Personal and Institutional Portfolios
IX. THE FUTURE OF GOLD
Can Fiat Money Be Managed Effectively?
The U S Gold Commission Tried to Bury Gold
Can the World Return to a Gold Standard?
Can Flight from the Paper Dollar Bring Us Back to Gold?
The Prospects for Gold and Liberty
Appendix A:
What a Dollar Was
Debasement
A Unique Episode
The Paper Dollar
If you would like to order a booklet, please contact the Institute directly.
Regards, Don |
