Does the Federal Reserve Cause Growth? Apparently!

Hating on the Federal Reserve is a religion.  Among the falsities that will be claimed is that the United States grew faster when the Federal Reserve did not exist than when it has.

This is an unusual claim, as U.S. NIPA accounts only started in 1934 (retroactive to 1929), and the Federal Reserve came into being in late 1913/early 1914.  Indeed, the only widely used statistics Corrections is familiar with, Christine Romer's data extending back to the 1870's, still make a comparison difficult (and, we conjecture, will bear out the Federal Reserve).

In any case, we can use the late Angus Maddison's historical data to look at the geometric average of GDP/capita growth in constant Geary-Khamis dollars from 1800-1914, and from 1914 to 2010, the last (and first) year the data is contiguously available.

As one might rationally expect, the results don't bear out the Fed haters:  from 1800-1914, the geometric average growth rate is 1.15% per capita in real terms.  From 1914 to 2010, the geometric average growth rate is 1.95% per capita in real terms (the common "2%" number often claimed).

Note that Corrections is willing to bet that actual GDP growth (rather than GDP per capita growth) was faster in the 1800's than in the 1900's, ironically due to the massive waves of immigration, an actual cause of growth that conservatives want to kill off due to largely unstated, unsubstantiated, or untestable claims.

This shouldn't convince anyone, nor does Corrections expect it will.  It's a terrible comparison to make, with little to no information contained in the statistics.  That said, this allows for a double indictment of the argument.