The Bottom 40%

[CrusaderFrank]

Coolidge derisively called Hoover "Wonder Boy" because he was a flaming Liberal who believed the government could do so much good

Coolidge? Oh right the Harding/Coolidge great depression where they cheered on 3 asset bubbles then handed it off to Hoover!

The 1920s Credit Bubble

The 1920s Credit Bubble spawned 3 asset bubbles

In a major paper by the Bank for International Settlements, "The Great Depression as a Credit Boom gone Wrong" Barry Eichengreen and Kris Michener (2003) set forth how the dramatic expansion of credit in the 1920s set the stage first for overconsumption, and then the drastic decline of the great depression:

The 1920s was a decade of expansion, reflecting recovery from World War I, new information and communications technologies like radio, and new processes like motor vehicle production using assembly-line methods. Accounts of the twenties in the United States ... emphasize the ready availability of credit, reflecting the ample gold reserves accumulated by the country during World War I, the stance of Federal Reserve policies, and financial innovations ranging from the development of the modern investment trust [i.e., mutual fund] to consumer credit tied to purchases of durable goods like automobiles. Credit fueled a real estate boom in 1925, a Wall Street boom in 1928-9, and a consumer durables spending spree spanning the second half of the 1920s. That these booms developed under the fixed exchange rates of the gold standard meant that they generated little inflationary pressure at home and that their effects were transmitted to the rest of the world. Absent overt signs of inflation, the Fed had no reason to raise the official short-term rate.

Graphically shown, we can see that the 1920s featured a property boom that peaked in 1925 (just as our own peaked in 2005-2006) but wages continued to climb until 1929:

Let's examine these bubbles one at a time.

The 20's featured 2 transformational technologies: Electricity and mass production. That's why they were roaring

FRANK, ALWAYS MISINFORMED

Statistical Portrait of the 1920s there was an explosion of consumer debt:

Consumer Credit

1925: $1.38 Billion (Consumer Credit outstanding)

1927: 15% of all consumer durables bought on installment payments
60% of automobiles bought on installment payments
80% of radios bought on installment payments

1
Whatever happened, the slump soon fed on itself. Weak spending depressed prices, which meant that many farmers, businesses, and nations couldn't repay their debts. Rising bad debts prompted banks to restrict new loans and sell financial assets, usually bonds. Scarce credit led to less borrowing, less spending, lower prices, and more bankruptcies. Trade and investment spiraled downward.

As another essayist put it:

The market crashes undermined ... confidence. The rich stopped spending on luxury items, and slowed investments. The middle-class and poor stopped buying things with installment credit for fear of loosing their jobs, and not being able to pay the interest. As a result industrial production fell by more than 9% between the market crashes in October and December 1929. As a result jobs were lost, and soon people starting defaulting on their interest payment. Radios and cars bought with installment credit had to be returned. All of the sudden warehouses were piling up with inventory. The thriving industries that had been connected with the automobile and radio industries started falling apart.


In summary, consumer credit underwent explosive growth in the 1920s. This growth meant that consumers were proverbially "loaded to the gills" with debt. Remember that some 80% of American families in the 1920s had no savings to fall back on if the (usually sole) breadwinner lost his job.

To make matters worse, installment credit loans had a hair trigger: if the consumer missed even one payment, the car, radio, furniture, or other durable good purchased could be immediately repossessed, the consequence of which was to prove devastating to the economy in 1929.

V. The Stock Market Margin credit bubble

I am sure you are very well familiar with this bubble, but let cite you one fact you may not already know:

Between the end of 1927 and October 1929, loans to brokers rose 92 percent. At the start of October, loans equaled nearly a fifth of the value of all stocks....

VI. When the credit bubble burst, consumers hit the wall

Initially, the 1929 depression was no worse than the business depressions of 1923 or 1927. For example, the 1929 Fed report on economic conditions noted:

[T]his reduction in employment, severe though it was (and it involved the discharge of over 700,00 workers between the time of the seasonal peak in September and December) did not approach in magnitude the decline in the years 1923 and 1924.

But that was no matter. The over-reliance on consumer credit now wreaked havoc with the economy:

What made matters worse was a big drop in U.S. consumer spending—far more than can be explained by the stock market crash. The drop may have been a backlash to the rise of installment lending (for cars, furniture, and appliances) in the twenties. The prevailing practice allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit.


The 1920s Credit Bubble

It's not a bubble when the Fed cuts the money supply by 1/3, that's strangulation.

I'll say it again for the Progs, the 20's were an economy bouyed by 2 simultaneous and transformational technologies: electricity and mass production

Buoyed by those transformational technology's? Oh right, AIDED BY HARDING/COOLIDGE'S 3 ASSET BUBBLES THEY CHEERED ON


WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION?

A favorite conservative argument is that the Federal Reserve Board caused the Great Depression by contracting the money supply.

This is a complete myth. According to the Federal Reserve's own records, at no time did the Fed pull money out of the system. Although it's true that the money supply contracted 31 percent between 1929 and 1933, this was not because of the Fed. Rather, the contraction was caused by three dramatic runs on banks, which would close 10,000 banks by 1933. So many failures were significant, because bank deposits formed 92 percent of all the money in circulation.

The Fed's Actions in the Great Depression



...The Run on Banks

So what caused a 31-percent contraction in the money supply? Pretty clearly, the public run on banks. The first banking panic occurred in late 1930; the second in the spring of 1931, and the third in March 1933. When it was over, 10,000 banks had gone out of business, with well over $2 billion in deposits lost.

WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION

Bernanke admits Friedman was right. Stop wasting electrons on stupid fuckwit morons

FRB Speech, Bernanke -- On Milton Friedman's ninetieth birthday -- November 8, 2002

 

[Muhammed]

How does the right wing propose to improve education and reduce funding at the same time? Does this involve forcing everyone to become a member of a specific religion, by any chance? Because religious people aren't necessarily that intelligent.

That is the most idiotic post I've ever seen on this site.

 

[CrusaderFrank]

All of the Progs posts have been squid ink deflection trying to obscure the main point: the Bottom 40% is populated by people who cannot function at grade level

 

[Dad2three]

Coolidge? Oh right the Harding/Coolidge great depression where they cheered on 3 asset bubbles then handed it off to Hoover!

The 1920s Credit Bubble

The 1920s Credit Bubble spawned 3 asset bubbles

In a major paper by the Bank for International Settlements, "The Great Depression as a Credit Boom gone Wrong" Barry Eichengreen and Kris Michener (2003) set forth how the dramatic expansion of credit in the 1920s set the stage first for overconsumption, and then the drastic decline of the great depression:

The 1920s was a decade of expansion, reflecting recovery from World War I, new information and communications technologies like radio, and new processes like motor vehicle production using assembly-line methods. Accounts of the twenties in the United States ... emphasize the ready availability of credit, reflecting the ample gold reserves accumulated by the country during World War I, the stance of Federal Reserve policies, and financial innovations ranging from the development of the modern investment trust [i.e., mutual fund] to consumer credit tied to purchases of durable goods like automobiles. Credit fueled a real estate boom in 1925, a Wall Street boom in 1928-9, and a consumer durables spending spree spanning the second half of the 1920s. That these booms developed under the fixed exchange rates of the gold standard meant that they generated little inflationary pressure at home and that their effects were transmitted to the rest of the world. Absent overt signs of inflation, the Fed had no reason to raise the official short-term rate.

Graphically shown, we can see that the 1920s featured a property boom that peaked in 1925 (just as our own peaked in 2005-2006) but wages continued to climb until 1929:

Let's examine these bubbles one at a time.

The 20's featured 2 transformational technologies: Electricity and mass production. That's why they were roaring

FRANK, ALWAYS MISINFORMED

Statistical Portrait of the 1920s there was an explosion of consumer debt:

Consumer Credit

1925: $1.38 Billion (Consumer Credit outstanding)

1927: 15% of all consumer durables bought on installment payments
60% of automobiles bought on installment payments
80% of radios bought on installment payments

1
Whatever happened, the slump soon fed on itself. Weak spending depressed prices, which meant that many farmers, businesses, and nations couldn't repay their debts. Rising bad debts prompted banks to restrict new loans and sell financial assets, usually bonds. Scarce credit led to less borrowing, less spending, lower prices, and more bankruptcies. Trade and investment spiraled downward.

As another essayist put it:

The market crashes undermined ... confidence. The rich stopped spending on luxury items, and slowed investments. The middle-class and poor stopped buying things with installment credit for fear of loosing their jobs, and not being able to pay the interest. As a result industrial production fell by more than 9% between the market crashes in October and December 1929. As a result jobs were lost, and soon people starting defaulting on their interest payment. Radios and cars bought with installment credit had to be returned. All of the sudden warehouses were piling up with inventory. The thriving industries that had been connected with the automobile and radio industries started falling apart.


In summary, consumer credit underwent explosive growth in the 1920s. This growth meant that consumers were proverbially "loaded to the gills" with debt. Remember that some 80% of American families in the 1920s had no savings to fall back on if the (usually sole) breadwinner lost his job.

To make matters worse, installment credit loans had a hair trigger: if the consumer missed even one payment, the car, radio, furniture, or other durable good purchased could be immediately repossessed, the consequence of which was to prove devastating to the economy in 1929.

V. The Stock Market Margin credit bubble

I am sure you are very well familiar with this bubble, but let cite you one fact you may not already know:

Between the end of 1927 and October 1929, loans to brokers rose 92 percent. At the start of October, loans equaled nearly a fifth of the value of all stocks....

VI. When the credit bubble burst, consumers hit the wall

Initially, the 1929 depression was no worse than the business depressions of 1923 or 1927. For example, the 1929 Fed report on economic conditions noted:

[T]his reduction in employment, severe though it was (and it involved the discharge of over 700,00 workers between the time of the seasonal peak in September and December) did not approach in magnitude the decline in the years 1923 and 1924.

But that was no matter. The over-reliance on consumer credit now wreaked havoc with the economy:

What made matters worse was a big drop in U.S. consumer spending—far more than can be explained by the stock market crash. The drop may have been a backlash to the rise of installment lending (for cars, furniture, and appliances) in the twenties. The prevailing practice allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit.


The 1920s Credit Bubble

It's not a bubble when the Fed cuts the money supply by 1/3, that's strangulation.

I'll say it again for the Progs, the 20's were an economy bouyed by 2 simultaneous and transformational technologies: electricity and mass production

Buoyed by those transformational technology's? Oh right, AIDED BY HARDING/COOLIDGE'S 3 ASSET BUBBLES THEY CHEERED ON


WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION?

A favorite conservative argument is that the Federal Reserve Board caused the Great Depression by contracting the money supply.

This is a complete myth. According to the Federal Reserve's own records, at no time did the Fed pull money out of the system. Although it's true that the money supply contracted 31 percent between 1929 and 1933, this was not because of the Fed. Rather, the contraction was caused by three dramatic runs on banks, which would close 10,000 banks by 1933. So many failures were significant, because bank deposits formed 92 percent of all the money in circulation.

The Fed's Actions in the Great Depression



...The Run on Banks

So what caused a 31-percent contraction in the money supply? Pretty clearly, the public run on banks. The first banking panic occurred in late 1930; the second in the spring of 1931, and the third in March 1933. When it was over, 10,000 banks had gone out of business, with well over $2 billion in deposits lost.

WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION

Bernanke admits Friedman was right. Stop wasting electrons on stupid fuckwit morons

FRB Speech, Bernanke -- On Milton Friedman's ninetieth birthday -- November 8, 2002

Bernanke a follower of Friedman? Shocking


Today we know how to prevent banking panics from developing into a chain reaction -- thanks to lessons learned from the Great Depression. For example, the stock market crash of 1987 was even larger than the Crash of '29, but timely government action prevented a run on banks. One of the solutions is to make sure that banks have enough reserves to cover their deposits - that is, expand the money supply. This is why the Fed's relative inaction between 1930 and 1931 has come under such intense criticism. But, to be fair, monetary theory was undeveloped at the time, and nobody was aware of the solutions.

Milton Friedman's Spin

So where do we get the myth that the Fed contracted the money supply? The impression is strongly given by Milton Friedman, lifelong foe of the Federal Reserve System. Friedman's arguments are not shared by his peers in the economics profession, but they have gained widespread fame among everyday conservatives.

Friedman begins his criticism of the Fed by defining "money" differently from other economists. Most economists define "money" as cash in circulation plus whatever reserves are held by banks, including checking accounts. But Friedman has devised a different measure, "monetary aggregates," which include difficult-to-reach money like savings accounts and money market accounts. This broader definition of money tends to blur the lines between cause and effect. For example, if you claimed that tallness contributes to excellence in basketball, I could "refute" your claim by defining everyone as tall.

Friedman points out that during recessions, his monetary aggregates always decline. What this means exactly is open to question. It could mean that allowing monetary aggregates to decline is the cause of recessions. Or it could mean that recessions cause everything in the economy to decline, including monetary aggregates.

After listening to Friedman's version of the Great Depression, many come away thinking: "The Fed reduced the monetary aggregate, and turned what would have been a normal recession into a catastrophic depression." But a closer look at his arguments reveals that he doesn't quite say this. What he actually says is: "The Fed failed to inject enough money into the system to sustain the desired minimum level of monetary aggregates. Because it failed to do this, the public run on banks resulted in a contraction in the money supply, which caused the Great Depression." At no time does Friedman claim that the Fed pulled money out of the system; instead, he criticizes it for not intervening in the crisis.

Which, one must admit, is an ironic argument, given Friedman's legendary disdain of activist government.

Conclusion

If the Fed is to be criticized for aggravating the Great Depression, then it's not because it intervened, but because it did not intervene enough. It is yet one more example of how Hoover's laissez-faire policies failed to head off the Depression.


WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION


FUKKN MORONS

 

[CrusaderFrank]

The 20's featured 2 transformational technologies: Electricity and mass production. That's why they were roaring

FRANK, ALWAYS MISINFORMED

Statistical Portrait of the 1920s there was an explosion of consumer debt:

Consumer Credit

1925: $1.38 Billion (Consumer Credit outstanding)

1927: 15% of all consumer durables bought on installment payments
60% of automobiles bought on installment payments
80% of radios bought on installment payments

1
Whatever happened, the slump soon fed on itself. Weak spending depressed prices, which meant that many farmers, businesses, and nations couldn't repay their debts. Rising bad debts prompted banks to restrict new loans and sell financial assets, usually bonds. Scarce credit led to less borrowing, less spending, lower prices, and more bankruptcies. Trade and investment spiraled downward.

As another essayist put it:

The market crashes undermined ... confidence. The rich stopped spending on luxury items, and slowed investments. The middle-class and poor stopped buying things with installment credit for fear of loosing their jobs, and not being able to pay the interest. As a result industrial production fell by more than 9% between the market crashes in October and December 1929. As a result jobs were lost, and soon people starting defaulting on their interest payment. Radios and cars bought with installment credit had to be returned. All of the sudden warehouses were piling up with inventory. The thriving industries that had been connected with the automobile and radio industries started falling apart.


In summary, consumer credit underwent explosive growth in the 1920s. This growth meant that consumers were proverbially "loaded to the gills" with debt. Remember that some 80% of American families in the 1920s had no savings to fall back on if the (usually sole) breadwinner lost his job.

To make matters worse, installment credit loans had a hair trigger: if the consumer missed even one payment, the car, radio, furniture, or other durable good purchased could be immediately repossessed, the consequence of which was to prove devastating to the economy in 1929.

V. The Stock Market Margin credit bubble

I am sure you are very well familiar with this bubble, but let cite you one fact you may not already know:

Between the end of 1927 and October 1929, loans to brokers rose 92 percent. At the start of October, loans equaled nearly a fifth of the value of all stocks....

VI. When the credit bubble burst, consumers hit the wall

Initially, the 1929 depression was no worse than the business depressions of 1923 or 1927. For example, the 1929 Fed report on economic conditions noted:

[T]his reduction in employment, severe though it was (and it involved the discharge of over 700,00 workers between the time of the seasonal peak in September and December) did not approach in magnitude the decline in the years 1923 and 1924.

But that was no matter. The over-reliance on consumer credit now wreaked havoc with the economy:

What made matters worse was a big drop in U.S. consumer spending—far more than can be explained by the stock market crash. The drop may have been a backlash to the rise of installment lending (for cars, furniture, and appliances) in the twenties. The prevailing practice allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit.


The 1920s Credit Bubble

It's not a bubble when the Fed cuts the money supply by 1/3, that's strangulation.

I'll say it again for the Progs, the 20's were an economy bouyed by 2 simultaneous and transformational technologies: electricity and mass production

Buoyed by those transformational technology's? Oh right, AIDED BY HARDING/COOLIDGE'S 3 ASSET BUBBLES THEY CHEERED ON


WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION?

A favorite conservative argument is that the Federal Reserve Board caused the Great Depression by contracting the money supply.

This is a complete myth. According to the Federal Reserve's own records, at no time did the Fed pull money out of the system. Although it's true that the money supply contracted 31 percent between 1929 and 1933, this was not because of the Fed. Rather, the contraction was caused by three dramatic runs on banks, which would close 10,000 banks by 1933. So many failures were significant, because bank deposits formed 92 percent of all the money in circulation.

The Fed's Actions in the Great Depression



...The Run on Banks

So what caused a 31-percent contraction in the money supply? Pretty clearly, the public run on banks. The first banking panic occurred in late 1930; the second in the spring of 1931, and the third in March 1933. When it was over, 10,000 banks had gone out of business, with well over $2 billion in deposits lost.

WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION

Bernanke admits Friedman was right. Stop wasting electrons on stupid fuckwit morons

FRB Speech, Bernanke -- On Milton Friedman's ninetieth birthday -- November 8, 2002

Bernanke a follower of Friedman? Shocking


Today we know how to prevent banking panics from developing into a chain reaction -- thanks to lessons learned from the Great Depression. For example, the stock market crash of 1987 was even larger than the Crash of '29, but timely government action prevented a run on banks. One of the solutions is to make sure that banks have enough reserves to cover their deposits - that is, expand the money supply. This is why the Fed's relative inaction between 1930 and 1931 has come under such intense criticism. But, to be fair, monetary theory was undeveloped at the time, and nobody was aware of the solutions.

Milton Friedman's Spin

So where do we get the myth that the Fed contracted the money supply? The impression is strongly given by Milton Friedman, lifelong foe of the Federal Reserve System. Friedman's arguments are not shared by his peers in the economics profession, but they have gained widespread fame among everyday conservatives.

Friedman begins his criticism of the Fed by defining "money" differently from other economists. Most economists define "money" as cash in circulation plus whatever reserves are held by banks, including checking accounts. But Friedman has devised a different measure, "monetary aggregates," which include difficult-to-reach money like savings accounts and money market accounts. This broader definition of money tends to blur the lines between cause and effect. For example, if you claimed that tallness contributes to excellence in basketball, I could "refute" your claim by defining everyone as tall.

Friedman points out that during recessions, his monetary aggregates always decline. What this means exactly is open to question. It could mean that allowing monetary aggregates to decline is the cause of recessions. Or it could mean that recessions cause everything in the economy to decline, including monetary aggregates.

After listening to Friedman's version of the Great Depression, many come away thinking: "The Fed reduced the monetary aggregate, and turned what would have been a normal recession into a catastrophic depression." But a closer look at his arguments reveals that he doesn't quite say this. What he actually says is: "The Fed failed to inject enough money into the system to sustain the desired minimum level of monetary aggregates. Because it failed to do this, the public run on banks resulted in a contraction in the money supply, which caused the Great Depression." At no time does Friedman claim that the Fed pulled money out of the system; instead, he criticizes it for not intervening in the crisis. Which, one must admit, is an ironic argument, given Friedman's legendary disdain of activist government.

Conclusion

If the Fed is to be criticized for aggravating the Great Depression, then it's not because it intervened, but because it did not intervene enough. It is yet one more example of how Hoover's laissez-faire policies failed to head off the Depression.


WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION


FUKKN MORONS

Hoover was a Progressive...know what, I can't deal with your level of stupid and uniformed anymore today...have fun

 

[Dad2three]

FRANK, ALWAYS MISINFORMED

Statistical Portrait of the 1920s there was an explosion of consumer debt:

Consumer Credit

1925: $1.38 Billion (Consumer Credit outstanding)

1927: 15% of all consumer durables bought on installment payments
60% of automobiles bought on installment payments
80% of radios bought on installment payments

1
Whatever happened, the slump soon fed on itself. Weak spending depressed prices, which meant that many farmers, businesses, and nations couldn't repay their debts. Rising bad debts prompted banks to restrict new loans and sell financial assets, usually bonds. Scarce credit led to less borrowing, less spending, lower prices, and more bankruptcies. Trade and investment spiraled downward.

As another essayist put it:

The market crashes undermined ... confidence. The rich stopped spending on luxury items, and slowed investments. The middle-class and poor stopped buying things with installment credit for fear of loosing their jobs, and not being able to pay the interest. As a result industrial production fell by more than 9% between the market crashes in October and December 1929. As a result jobs were lost, and soon people starting defaulting on their interest payment. Radios and cars bought with installment credit had to be returned. All of the sudden warehouses were piling up with inventory. The thriving industries that had been connected with the automobile and radio industries started falling apart.


In summary, consumer credit underwent explosive growth in the 1920s. This growth meant that consumers were proverbially "loaded to the gills" with debt. Remember that some 80% of American families in the 1920s had no savings to fall back on if the (usually sole) breadwinner lost his job.

To make matters worse, installment credit loans had a hair trigger: if the consumer missed even one payment, the car, radio, furniture, or other durable good purchased could be immediately repossessed, the consequence of which was to prove devastating to the economy in 1929.

V. The Stock Market Margin credit bubble

I am sure you are very well familiar with this bubble, but let cite you one fact you may not already know:

Between the end of 1927 and October 1929, loans to brokers rose 92 percent. At the start of October, loans equaled nearly a fifth of the value of all stocks....

VI. When the credit bubble burst, consumers hit the wall

Initially, the 1929 depression was no worse than the business depressions of 1923 or 1927. For example, the 1929 Fed report on economic conditions noted:

[T]his reduction in employment, severe though it was (and it involved the discharge of over 700,00 workers between the time of the seasonal peak in September and December) did not approach in magnitude the decline in the years 1923 and 1924.

But that was no matter. The over-reliance on consumer credit now wreaked havoc with the economy:

What made matters worse was a big drop in U.S. consumer spending—far more than can be explained by the stock market crash. The drop may have been a backlash to the rise of installment lending (for cars, furniture, and appliances) in the twenties. The prevailing practice allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit.


The 1920s Credit Bubble

It's not a bubble when the Fed cuts the money supply by 1/3, that's strangulation.

I'll say it again for the Progs, the 20's were an economy bouyed by 2 simultaneous and transformational technologies: electricity and mass production

Buoyed by those transformational technology's? Oh right, AIDED BY HARDING/COOLIDGE'S 3 ASSET BUBBLES THEY CHEERED ON


WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION?

A favorite conservative argument is that the Federal Reserve Board caused the Great Depression by contracting the money supply.

This is a complete myth. According to the Federal Reserve's own records, at no time did the Fed pull money out of the system. Although it's true that the money supply contracted 31 percent between 1929 and 1933, this was not because of the Fed. Rather, the contraction was caused by three dramatic runs on banks, which would close 10,000 banks by 1933. So many failures were significant, because bank deposits formed 92 percent of all the money in circulation.

The Fed's Actions in the Great Depression



...The Run on Banks

So what caused a 31-percent contraction in the money supply? Pretty clearly, the public run on banks. The first banking panic occurred in late 1930; the second in the spring of 1931, and the third in March 1933. When it was over, 10,000 banks had gone out of business, with well over $2 billion in deposits lost.

WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION

Bernanke admits Friedman was right. Stop wasting electrons on stupid fuckwit morons

FRB Speech, Bernanke -- On Milton Friedman's ninetieth birthday -- November 8, 2002

Bernanke a follower of Friedman? Shocking


Today we know how to prevent banking panics from developing into a chain reaction -- thanks to lessons learned from the Great Depression. For example, the stock market crash of 1987 was even larger than the Crash of '29, but timely government action prevented a run on banks. One of the solutions is to make sure that banks have enough reserves to cover their deposits - that is, expand the money supply. This is why the Fed's relative inaction between 1930 and 1931 has come under such intense criticism. But, to be fair, monetary theory was undeveloped at the time, and nobody was aware of the solutions.

Milton Friedman's Spin

So where do we get the myth that the Fed contracted the money supply? The impression is strongly given by Milton Friedman, lifelong foe of the Federal Reserve System. Friedman's arguments are not shared by his peers in the economics profession, but they have gained widespread fame among everyday conservatives.

Friedman begins his criticism of the Fed by defining "money" differently from other economists. Most economists define "money" as cash in circulation plus whatever reserves are held by banks, including checking accounts. But Friedman has devised a different measure, "monetary aggregates," which include difficult-to-reach money like savings accounts and money market accounts. This broader definition of money tends to blur the lines between cause and effect. For example, if you claimed that tallness contributes to excellence in basketball, I could "refute" your claim by defining everyone as tall.

Friedman points out that during recessions, his monetary aggregates always decline. What this means exactly is open to question. It could mean that allowing monetary aggregates to decline is the cause of recessions. Or it could mean that recessions cause everything in the economy to decline, including monetary aggregates.

After listening to Friedman's version of the Great Depression, many come away thinking: "The Fed reduced the monetary aggregate, and turned what would have been a normal recession into a catastrophic depression." But a closer look at his arguments reveals that he doesn't quite say this. What he actually says is: "The Fed failed to inject enough money into the system to sustain the desired minimum level of monetary aggregates. Because it failed to do this, the public run on banks resulted in a contraction in the money supply, which caused the Great Depression." At no time does Friedman claim that the Fed pulled money out of the system; instead, he criticizes it for not intervening in the crisis. Which, one must admit, is an ironic argument, given Friedman's legendary disdain of activist government.

Conclusion

If the Fed is to be criticized for aggravating the Great Depression, then it's not because it intervened, but because it did not intervene enough. It is yet one more example of how Hoover's laissez-faire policies failed to head off the Depression.


WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION


FUKKN MORONS

Hoover was a Progressive...know what, I can't deal with your level of stupid and uniformed anymore today...have fun

Your inability to use reason, logic and HONESTY on Uncle Milties myth, is noted Bubba

 

[EdwardBaiamonte]

Funny, I thought it was Herbert Hoover,

total idiot illiterate liberal has no idea that Hoover and Bush were liberals!!

Hoover was no liberal. He did absolutely nothing after the crash other than to allow things to take their course. Had he pushed for strong government intervention, things would never have gotten as bad as they did. By the time FDR was elected, Hoover had allowed the US economy to be buried. From your point of view, we have never had a conservative president, because from my pov, Ronald Reagan was only a mild conservative. BTW, I'm not the one who thinks you can teach 25 kids and run a school for $50,000 per year. If you want to know who the idiot is here, take a look at some of your idiotic posts.

Coolidge derisively called Hoover "Wonder Boy" because he was a flaming Liberal who believed the government could do so much good

As the Depression became worse, however, calls grew for increased federal intervention and spending. But Hoover refused to involve the federal government in forcing fixed prices, controlling businesses, or manipulating the value of the currency, all of which he felt were steps towards socialism. He was inclined to give indirect aid to banks or local public works projects, but he refused to use federal money for direct aid to citizens, believing the dole would weaken public morale. Instead, he focused on volunteerism to raise money. Hoover’s opponents painted him as uncaring toward the common citizen, even though he was in fact a philanthropist and a progressive before becoming president. During his reelection campaign, Hoover tried to convince Americans that the measures they were calling for might seem to help in the short term, but would be ruinous in the long run. He asserted that he cared for common Americans too much to destroy the country’s foundations with deficits and socialist institutions. He was soundly defeated by Franklin D. Roosevelt in 1932.

Herbert Hoover on the Great Depression and New Deal, 1931–1933 | The Gilder Lehrman Institute of American History

ok so we all agree that liberalism caused the Great Depression and prolonged it for 16 years when conservatism would have ended it in a year or less. What do FDR and Obama have in common: the 2 worst economies in the last 100 years!

 

[EdwardBaiamonte]

Uncle Milties myth,

What does dumto3 think uncle milties (Nobelwinner ) myth is??????????????????

 

[auditor0007]

Funny, I thought it was Herbert Hoover,

total idiot illiterate liberal has no idea that Hoover and Bush were liberals!!

Hoover was no liberal. He did absolutely nothing after the crash other than to allow things to take their course. Had he pushed for strong government intervention, things would never have gotten as bad as they did. By the time FDR was elected, Hoover had allowed the US economy to be buried. From your point of view, we have never had a conservative president, because from my pov, Ronald Reagan was only a mild conservative. BTW, I'm not the one who thinks you can teach 25 kids and run a school for $50,000 per year. If you want to know who the idiot is here, take a look at some of your idiotic posts.

Coolidge derisively called Hoover "Wonder Boy" because he was a flaming Liberal who believed the government could do so much good

As the Depression became worse, however, calls grew for increased federal intervention and spending. But Hoover refused to involve the federal government in forcing fixed prices, controlling businesses, or manipulating the value of the currency, all of which he felt were steps towards socialism. He was inclined to give indirect aid to banks or local public works projects, but he refused to use federal money for direct aid to citizens, believing the dole would weaken public morale. Instead, he focused on volunteerism to raise money. Hoover’s opponents painted him as uncaring toward the common citizen, even though he was in fact a philanthropist and a progressive before becoming president. During his reelection campaign, Hoover tried to convince Americans that the measures they were calling for might seem to help in the short term, but would be ruinous in the long run. He asserted that he cared for common Americans too much to destroy the country’s foundations with deficits and socialist institutions. He was soundly defeated by Franklin D. Roosevelt in 1932.

Herbert Hoover on the Great Depression and New Deal, 1931–1933 | The Gilder Lehrman Institute of American History

ok so we all agree that liberalism caused the Great Depression and prolonged it for 16 years when conservatism would have ended it in a year or less. What do FDR and Obama have in common: the 2 worst economies in the last 100 years!

Good Lord are you stupid.

 

[EdwardBaiamonte]

total idiot illiterate liberal has no idea that Hoover and Bush were liberals!!

Hoover was no liberal. He did absolutely nothing after the crash other than to allow things to take their course. Had he pushed for strong government intervention, things would never have gotten as bad as they did. By the time FDR was elected, Hoover had allowed the US economy to be buried. From your point of view, we have never had a conservative president, because from my pov, Ronald Reagan was only a mild conservative. BTW, I'm not the one who thinks you can teach 25 kids and run a school for $50,000 per year. If you want to know who the idiot is here, take a look at some of your idiotic posts.

Coolidge derisively called Hoover "Wonder Boy" because he was a flaming Liberal who believed the government could do so much good

As the Depression became worse, however, calls grew for increased federal intervention and spending. But Hoover refused to involve the federal government in forcing fixed prices, controlling businesses, or manipulating the value of the currency, all of which he felt were steps towards socialism. He was inclined to give indirect aid to banks or local public works projects, but he refused to use federal money for direct aid to citizens, believing the dole would weaken public morale. Instead, he focused on volunteerism to raise money. Hoover’s opponents painted him as uncaring toward the common citizen, even though he was in fact a philanthropist and a progressive before becoming president. During his reelection campaign, Hoover tried to convince Americans that the measures they were calling for might seem to help in the short term, but would be ruinous in the long run. He asserted that he cared for common Americans too much to destroy the country’s foundations with deficits and socialist institutions. He was soundly defeated by Franklin D. Roosevelt in 1932.

Herbert Hoover on the Great Depression and New Deal, 1931–1933 | The Gilder Lehrman Institute of American History

ok so we all agree that liberalism caused the Great Depression and prolonged it for 16 years when conservatism would have ended it in a year or less. What do FDR and Obama have in common: the 2 worst economies in the last 100 years!

Good Lord are you stupid.

ok so we all agree that liberalism caused the Great Depression and prolonged it for 16 years when conservatism would have ended it in a year or less. What do FDR and Obama have in common: the 2 worst economies in the last 100 years!