The Bottom 40%

[kaz]

Yep, the Founders those guys who chose a HEAVY protectionist policy?

you have told that lie before, stupid!! Please stop lying!!

(Re-)Introducing: The American School of Economics


When the United States became independent from Britain it also rebelled against the British System of economics, characterized by Adam Smith, in favor of the American School based on protectionism and infrastructure and prospered under this system for almost 200 years to become the wealthiest nation in the world. Unrestrained free trade resurfaced in the early 1900s culminating in the Great Depression and again in the 1970s culminating in the current Economic Meltdown.


Closely related to mercantilism, it can be seen as contrary to classical economics. It consisted of these three core policies:

1. protecting industry through selective high tariffs (especially 1861–1932) and through subsidies (especially 1932–70)
2. government investments in infrastructure creating targeted internal improvements (especially in transportation)
3. a national bank with policies that promote the growth of productive enterprises rather than speculation.

The American School of capitalism was intended to allow the United States to become economically independent and nationally self-sufficient.




Frank Bourgin's 1989 study of the Constitutional Convention shows that direct government involvement in the economy was intended by the Founders.


The goal, most forcefully articulated by Hamilton, was to ensure that dearly won political independence was not lost by being economically and financially dependent on the powers and princes of Europe. The creation of a strong central government able to promote science, invention, industry and commerce, was seen as an essential means of promoting the general welfare and making the economy of the United States strong enough for them to determine their own destiny

American School (economics) - Wikipedia, the free encyclopedia

Admit you lied or give us a good example of protectionism from our Founders. You idiot liberal they gave us the commerce clause which was designed to promote free trade. NOw do you see what a total idiot you are. That's why you though our founders were liberal and now you know even that was not true!!

The founding fathers were classic liberals. The people calling themselves "liberal" today are actually authoritarian leftists, there is nothing in common between the two

Liberals are still liberals

The founders were the greatest liberals of the day. They used liberal concepts to solve the issues of the day

Just like today's liberals

Today's liberals use authoritarian leftism to "solve the issues of the day," that is nothing like the founders who actually were liberals, comrade big guy. You are Marxists

 

[Dad2three]

you have told that lie before, stupid!! Please stop lying!!

(Re-)Introducing: The American School of Economics


When the United States became independent from Britain it also rebelled against the British System of economics, characterized by Adam Smith, in favor of the American School based on protectionism and infrastructure and prospered under this system for almost 200 years to become the wealthiest nation in the world. Unrestrained free trade resurfaced in the early 1900s culminating in the Great Depression and again in the 1970s culminating in the current Economic Meltdown.


Closely related to mercantilism, it can be seen as contrary to classical economics. It consisted of these three core policies:

1. protecting industry through selective high tariffs (especially 1861–1932) and through subsidies (especially 1932–70)
2. government investments in infrastructure creating targeted internal improvements (especially in transportation)
3. a national bank with policies that promote the growth of productive enterprises rather than speculation.

The American School of capitalism was intended to allow the United States to become economically independent and nationally self-sufficient.




Frank Bourgin's 1989 study of the Constitutional Convention shows that direct government involvement in the economy was intended by the Founders.


The goal, most forcefully articulated by Hamilton, was to ensure that dearly won political independence was not lost by being economically and financially dependent on the powers and princes of Europe. The creation of a strong central government able to promote science, invention, industry and commerce, was seen as an essential means of promoting the general welfare and making the economy of the United States strong enough for them to determine their own destiny

American School (economics) - Wikipedia, the free encyclopedia

Admit you lied or give us a good example of protectionism from our Founders. You idiot liberal they gave us the commerce clause which was designed to promote free trade. NOw do you see what a total idiot you are. That's why you though our founders were liberal and now you know even that was not true!!

The founding fathers were classic liberals. The people calling themselves "liberal" today are actually authoritarian leftists, there is nothing in common between the two

Liberals are still liberals

The founders were the greatest liberals of the day. They used liberal concepts to solve the issues of the day

Just like today's liberals

Today's liberals use authoritarian leftism to "solve the issues of the day," that is nothing like the founders who actually were liberals, comrade big guy. You are Marxists

Right, the Founders WEREN'T the authoritarian types. Geo Washington whiskey rebellion for $200 Alex?

The Whiskey Rebellion of August 1794 was the product of growing discontentment, which had been expressed as early as 1791, of grain farmers who resented a federal tax imposed on their distillery products. As growers threatened federal tax collectors with physical harm, Washington at first tried to prosecute the resistors in the court system. In 1794, however, 6,000 men angry at the tax gathered at a field near Pittsburgh and, with fake guillotines at the ready, challenged Washington and the federal government to disperse them.

In response, Washington issued a public proclamation on August 7, giving his former Revolutionary War aide-de-camp and current Secretary of the Treasury Alexander Hamilton the power to organize troops to put down the rebellion. In his letter to Lee on August 26, Washington noted that the general populace considered the insurrection with “universal indignation and abhorrence” and said that he otherwise would not have authorized such a heavy-handed response. Washington knew that the nation, having only recently violently overthrown the tyrannical English king, was in a delicate state and did not want to appear as an equally despotic president. He waited to see if the insurgents would back down; they did not.


According to biographer Joseph Ellis in His Excellency, George Washington, the aging president mounted his horse on September 30 to lead a force of 13,000–larger than any American army amassed in one place during the Revolution–to quell the uprising. (The act of mounting his war horse was brief and largely symbolic; Washington made most of the journey by carriage.) Lee joined Washington and the army on its march to Pennsylvania. This was the first and only time a sitting American president ever led troops into battle. Washington abandoned the procession early, however, leaving Alexander Hamilton, the true mastermind of the military response to the insurrection, in charge of the final approach to Pittsburgh.

The rioters dispersed in the presence of the federal troops and bloodshed was averted. In the aftermath, Washington reported to Congress that although he had agonized about the decision and intended to uphold the constitutional right to protest unfair tax laws, the insurrection had to be put down or the survival of the young democracy would have been in peril.


George Washington writes to Henry Lee - Aug 26, 1794 - HISTORY.com

 

[EdwardBaiamonte]

Right, the Founders WEREN'T the authoritarian types. Geo Washington whiskey rebellion for $200 Alex?

Washington was a Federalist. When Jefferson and Madison saw that Federalists were perhaps liberal authoritarian they quickly formed the Republican Party and vanquished the Federalists who were never heard from again thus establishing our revolution as a Republican revolution for tiny tiny conservative Republican govt.

 

[CrusaderFrank]

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

 

[HenryBHough]

More "quotations" are attributed to Silent Cal than the total number of words he spoke in his entire lifetime.

 

[EdwardBaiamonte]

More "quotations" are attributed to Silent Cal than the total number of words he spoke in his entire lifetime.

liberals are crushed to find that Hoover and FDR were liberals and that 16 years is 15 years longer than it would take capitalism to fix a depressed economy.

 

[Dad2three]

Right, the Founders WEREN'T the authoritarian types. Geo Washington whiskey rebellion for $200 Alex?

Washington was a Federalist. When Jefferson and Madison saw that Federalists were perhaps liberal authoritarian they quickly formed the Republican Party and vanquished the Federalists who were never heard from again thus establishing our revolution as a Republican revolution for tiny tiny conservative Republican govt.

LMAOROG

Congress Passes Socialized Medicine and Mandates Health Insurance -In 1798

Congress Passes Socialized Medicine and Mandates Health Insurance -In 1798



Most Federalists were wealthy, well-educated, and unified by the desire for a powerful, centralized government. Their leaders were usually influential men such as George Washington and Benjamin Franklin. They were proponents of an orderly, efficient government that could protect their economic status. The Federalists were well organized and in many states they often controlled the elections of ratifying conventions with their power and influence.

Their opponents, the Antifederalists, were generally farmers, debtors, and other lower class people who were loyal to their state governments. Antifederalist leaders, including Samuel Adams and Patrick Henry, typically enjoyed more wealth and power than the people they led. Henry was notorious for fighting for individual liberties, and one of the primary objections the Antifederalists had to the Constitution was the lack of a Bill of Rights, which would have afforded basic liberties to the public. They also feared the powers that would be assigned to a large central government, especially powers of taxation. Many Antifederalists believed a republican government could not rule a nation as large as America, since previously republics had only been successful in small regions like Switzerland and the Netherlands.

Alexander Hamilton, James Madison, and John Jay stepped forward with a series of essays designed to alleviate the Antifederalists’ fears. These essays came to be known as the Federalists Papers, and they were the most influential political writings of the time. Hamilton, Madison, and Jay argued that limitations on governmental power were built into the Constitution with a series of checks and balances. In these essays they also explained the need for centralized government so the United States could earn the respect of other countries.

With the assistance of the Federalist Papers, the Federalists were able to break down resistance and gain enough support to ratify the Constitution. Delaware, Pennsylvania, and New Jersey became the first states to ratify, with all three taking action in December of 1787. Georgia, Connecticut, Massachusetts, Maryland, and South Carolina all ratified between January and May of 1788. The pivotal vote came in June of 1788 when New Hampshire became the ninth state to ratify, meeting the criteria required to adopt the Constitution.

With this vote, the Constitution went into effect, and the Continental Congress respectfully bowed out.



Federalists versus Antifederalists - AP U.S. History Topic Outlines - Study Notes




The Federalist Party originated in opposition to the Democratic-Republican Party in America during President George Washington’s first administration. Known for their support of a strong national government, the Federalists emphasized commercial and diplomatic harmony with Britain following the signing of the 1794 Jay Treaty. The party split over negotiations with France during President John Adams’s administration, though it remained a political force until its members passed into the Democratic and the Whig parties in the 1820s. Despite its dissolution, the party made a lasting impact by laying the foundations of a national economy, creating a national judicial system and formulating principles of foreign policy.


Federalist Party - Facts & Summary - HISTORY.com

 

[Dad2three]

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

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.

 

[CrusaderFrank]

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

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

 

[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

 

[Vigilante]

If you listen closely, you can hear that 40% yelling.....

 

[CrusaderFrank]

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

And FDR spend and spend and spend and unemployment averaged 20% for his entire first 2 terms

 

[Dad2three]

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

And FDR spend and spend and spend and unemployment averaged 20% for his entire first 2 terms

NOTE 1937 FDR LISTENED TO THE DEFICIT SCOLDS, AND CUT SPENDING (AUSTERITY)

 

[CrusaderFrank]

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

And FDR spend and spend and spend and unemployment averaged 20% for his entire first 2 terms

NOTE 1937 FDR LISTENED TO THE DEFICIT SCOLDS, AND CUT SPENDING (AUSTERITY)

Must be Bush's Fault that FDR averaged 20% unemployment his entire first 2 terms.

Austerity worked great for Harding and Coolidge, why was "austerity" so mean to that economic Jihadist FDR?

 

[Dad2three]

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

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

 

[Dad2three]

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

And FDR spend and spend and spend and unemployment averaged 20% for his entire first 2 terms

NOTE 1937 FDR LISTENED TO THE DEFICIT SCOLDS, AND CUT SPENDING (AUSTERITY)

Must be Bush's Fault that FDR averaged 20% unemployment his entire first 2 terms.

Austerity worked great for Harding and Coolidge, why was "austerity" so mean to that economic Jihadist FDR?

Weird FDR took office in March 1933

LISTENED TO THE DEFICIT SCOLDS IN 1937, AND CUT SPENDING 10%


....there’s a big difference between inflation-fighting recessions, in which the Fed squeezes to bring inflation down, then relaxes — and recessions brought on by overstretch in debt and investment. The former tend to be V-shaped, with a rapid recovery once the Fed relents; the latter tend to be slow, because it’s much harder to push private spending higher than to stop holding it down.

And the 1920-21 recession was basically an inflation-fighting recession — although the Fed was trying to bring the level of prices, rather than the rate of change, down. What you had was a postwar bulge in prices, which was then reversed:

Money was tightened, then loosened again:

Discount rates are a problematic indicator, but here’s what happened to commercial paper rates:

Historical statistics, Millennial edition
And so there was a V-shaped recovery:

The deflation may have helped by increasing the real money supply — at least Meltzer thinks so (pdf) — but if so, the key point was that the economy was nowhere near the zero lower bound, so there was plenty of room for the conventional monetary channel to work.

All of this has zero relevance to an economy in our current situation, in which the recession was brought on by private overstretch, not tight money, and in which the zero lower bound is all too binding.

So do we have anything to learn from the macroeconomics of Warren Harding? No.

http://krugman.blogs.nytimes.com/2011/04/01/1921-and-all-that/?_r=0

 

[CrusaderFrank]

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

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

 

[CrusaderFrank]

Paul "trillion dollar coin" Krugman is an economic illiterate

 

[Dad2three]

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

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

 

[Dad2three]

Paul "trillion dollar coin" Krugman is an economic illiterate

LOL, You sure refuted his posits Bubba