The Depression of 1920

[Truthmatters]

The result of his and his VP who took office after his death and ccontiunued his polices were the Crash of 1929 and the Great Depression.

You guys then did it to us again this time with your idiot insistance that the Free Market solves everthing.

try as you may history just keeps getting in the way of your stupidity.

 

[Paulie]

I can summarize it without even watching it.

The Free market is god and this all happened because they didnt allow corporations to do whatever they wanted without laws, rules or taxes.

I love how you make an "informed" decision about something without studying it. I'm sure that's how the administration you helped elect works, given the fascist steps they've taken.

But yeah, the video did support and praise the free market. Since the free market is the only system where the poor aren't pillaged for the benefit of the well-connected, Thomas did say that letting companies fail, instead of bailing them out, is a recipe for a quick recovery, as evidenced by how quickly the Depression in 1920 ended, and how poorly the Japanese recovered in that same time period with their interventions. In fact, GDP figures fell in 1920 more steeply than they did in 1929, and if Harding was an interventionist like Hoover, we'd be talking about the 1921 Depression too.

The speech focused on fiscal and monetary policy that were able to help the economy recover quickly. Tax cuts, coupled with enormous spending cuts, were the key enablers in the recovery. The Federal Reserve did not intervene, as it had no authority to do so until 1922 (with open market operations), and the economy was all recovered by then.

oh come on that's not fair, that's too much fact for her all at once. You have to ease her in.

 

[PoliticalChic]

Harding set the stage for the excesses of the 1920s which helped cause the GD.

He had the same type of buddy buddy cabinet that Bush had and they too were corrupt as hell.

Thanks for giving an example of the difference between conclusions and contusions.

There is a point here I've kind of wondered about. Many folks blame the Fed for the 20s stock market speculation, claimin lower interest and making money more available fueled the market rise. Why wouldn't the same argument hold for tax cuts?

Seems to me that is one is going to argue that too much money in the system fueled the market rise, you'd have to acknowledge that low taxes had the same effect.

The first step is the data as to how much the tax cuts you refer to put into the economy, and the amount the fed added.

I seem to recall reading that part of the current stimulus plan has almost tripled the money supply. A guess would be runaway inflation in our future- or a Volcker-initiated recession.

 

[mash107]

The result of his and his VP who took office after his death and ccontiunued his polices were the Crash of 1929 and the Great Depression.

You guys then did it to us again this time with your idiot insistance that the Free Market solves everthing.

try as you may history just keeps getting in the way of your stupidity.

I'd take the 2 year free market solution to a Depression over your 15 year fascist solution to a Depression any day.

 

[Paulie]

Harding set the stage for the excesses of the 1920s which helped cause the GD.

He had the same type of buddy buddy cabinet that Bush had and they too were corrupt as hell.

Thanks for giving an example of the difference between conclusions and contusions.

There is a point here I've kind of wondered about. Many folks blame the Fed for the 20s stock market speculation, claimin lower interest and making money more available fueled the market rise. Why wouldn't the same argument hold for tax cuts?

Seems to me that is one is going to argue that too much money in the system fueled the market rise, you'd have to acknowledge that low taxes had the same effect.

The difference between tax cuts and artificially low interest rates is that tax cuts don't contribute to massive leveraging, whereas low interest rates do. Tax reductions offer businesses the ability to grow with more of their own money, but lower interest rates only lead to excessive debt in the end.

There's really no way to stop the misallocation of resources. It's inevitable. All you can hope for is some fiscal responsibility, of which the top priority should be to keep debt sustainable, not at inflated proportions. I'd much rather my malinvestment be derived from my own acquired wealth, rather than money I borrowed becuase it was cheap and I wanted to take a big risk.

 

[Iriemon]

Thanks for giving an example of the difference between conclusions and contusions.

There is a point here I've kind of wondered about. Many folks blame the Fed for the 20s stock market speculation, claimin lower interest and making money more available fueled the market rise. Why wouldn't the same argument hold for tax cuts?

Seems to me that is one is going to argue that too much money in the system fueled the market rise, you'd have to acknowledge that low taxes had the same effect.

The difference between tax cuts and artificially low interest rates is that tax cuts don't contribute to massive leveraging, whereas low interest rates do. Tax reductions offer businesses the ability to grow with more of their own money, but lower interest rates only lead to excessive debt in the end.

There's really no way to stop the misallocation of resources. It's inevitable. All you can hope for is some fiscal responsibility, of which the top priority should be to keep debt sustainable, not at inflated proportions. I'd much rather my malinvestment be derived from my own acquired wealth, rather than money I borrowed becuase it was cheap and I wanted to take a big risk.

Those are good points and make sense, though both have the effect of increasing the funds available to investors, which in the late 20s used them to speculate in the stock market.

I think a real problem in the 20s was the fact that investors could margin 90% of a stock purchase, leaving precious little floor and in essence wiping out their investment (and worse, subjecting them to calls to cover the margins) if stock prices fell 10%.

 

[PoliticalChic]

The result of his and his VP who took office after his death and ccontiunued his polices were the Crash of 1929 and the Great Depression.

You guys then did it to us again this time with your idiot insistance that the Free Market solves everthing.

try as you may history just keeps getting in the way of your stupidity.

Ah, so you are the one George Santayana was thinking of!

For informational purposes, I have to disabuse you of the use of "you guys." I have regularly, and proudly, proclaimed that I am a Conservative.

If you think, and here I use the term 'think' as the same kind of thinking that a pupa uses when it becomes a moth, that President Bush was either responsible for the meltdown, or that he was a Conservative, you'd be wrong for the, what, thousandth time today. New record?

Amazing steadfastness.

 

[Paulie]

There is a point here I've kind of wondered about. Many folks blame the Fed for the 20s stock market speculation, claimin lower interest and making money more available fueled the market rise. Why wouldn't the same argument hold for tax cuts?

Seems to me that is one is going to argue that too much money in the system fueled the market rise, you'd have to acknowledge that low taxes had the same effect.

The difference between tax cuts and artificially low interest rates is that tax cuts don't contribute to massive leveraging, whereas low interest rates do. Tax reductions offer businesses the ability to grow with more of their own money, but lower interest rates only lead to excessive debt in the end.

There's really no way to stop the misallocation of resources. It's inevitable. All you can hope for is some fiscal responsibility, of which the top priority should be to keep debt sustainable, not at inflated proportions. I'd much rather my malinvestment be derived from my own acquired wealth, rather than money I borrowed becuase it was cheap and I wanted to take a big risk.

Those are good points and make sense, though both have the effect of increasing the funds available to investors, which in the late 20s used them to speculate in the stock market.

I think a real problem in the 20s was the fact that investors could margin 90% of a stock purchase, leaving precious little floor and in essence wiping out their investment (and worse, subjecting them to calls to cover the margins) if stock prices fell 10%.

Why shouldn't investors be allowed to invest their own money though? You love life to its fullest when those investors are inflating the economy with false growth in their various bubbles, but as soon as one bursts and the economy goes down the tubes everyone's up in arms over it. I'm sure there's almost NO ONE here who wasn't enjoying the housing boom and all its localized derivative successes throughout the country. My line of work at the time was busier than I can ever imagine, money was certainly no object to me. The only problem with this last one is that it was being done with way too much leverage. If investors are inflating the market with leveraged funds, the bubble burst is going to be that much more painful.

There's nothing wrong with businesses and individuals having more of their own money to allocate as they see fit. When it's being done on 30/1 lending ratios, however, there's a problem.

That's the main difference. Like I said, you're never going to irradicate resource misallocation. Certainly not by taking more of someone's hard earned money from their wallet.

 

[mash107]

Harding set the stage for the excesses of the 1920s which helped cause the GD.

He had the same type of buddy buddy cabinet that Bush had and they too were corrupt as hell.

Thanks for giving an example of the difference between conclusions and contusions.

There is a point here I've kind of wondered about. Many folks blame the Fed for the 20s stock market speculation, claimin lower interest and making money more available fueled the market rise. Why wouldn't the same argument hold for tax cuts?

Seems to me that is one is going to argue that too much money in the system fueled the market rise, you'd have to acknowledge that low taxes had the same effect.

That is a good point. However, one has to assume that misallocations of resources on a grand scale only happens when the time-preference (interest rates) are altered artificially. If you're building something big for a later day, assuming that people are saving their money and you're looking to cash in on that later day, and suddenly an artificial force tricks people into splurging their money now with lower interest rates, you're going to be screwed, along with everyone else. That's essentially the Austrian business cycle.

Misallocations happen in the free market, sure, but one has to understand why hundreds of banks are failing today, or hundreds of stock brokers failed earlier with NASDAQ. Bad judgment isn't something shared by an entire industry. Not every homebuyer were idiots running up to 2007. Something else must be at play, and that is certainly true. So it's not really a matter of how much money being in the system, per se, than how that money is being used and how the time-preference of people using that money is being altered artificially.

 

[Iriemon]

The difference between tax cuts and artificially low interest rates is that tax cuts don't contribute to massive leveraging, whereas low interest rates do. Tax reductions offer businesses the ability to grow with more of their own money, but lower interest rates only lead to excessive debt in the end.

There's really no way to stop the misallocation of resources. It's inevitable. All you can hope for is some fiscal responsibility, of which the top priority should be to keep debt sustainable, not at inflated proportions. I'd much rather my malinvestment be derived from my own acquired wealth, rather than money I borrowed becuase it was cheap and I wanted to take a big risk.

Those are good points and make sense, though both have the effect of increasing the funds available to investors, which in the late 20s used them to speculate in the stock market.

I think a real problem in the 20s was the fact that investors could margin 90% of a stock purchase, leaving precious little floor and in essence wiping out their investment (and worse, subjecting them to calls to cover the margins) if stock prices fell 10%.

Why shouldn't investors be allowed to invest their own money though? ...

I don't think there is anything wrong with it.

A number of folks (and not you to my knowledge) have argued that the Fed caused things like the 1929 GD and the current one because its money policies made too much money available and that fueled the market speculation. I don't necessarily agree with that proposition, but for those who make it, it seems to me you'd have to also say that lower tax rates on those who are investors would also have this effect.

 

[PoliticalChic]

The difference between tax cuts and artificially low interest rates is that tax cuts don't contribute to massive leveraging, whereas low interest rates do. Tax reductions offer businesses the ability to grow with more of their own money, but lower interest rates only lead to excessive debt in the end.

There's really no way to stop the misallocation of resources. It's inevitable. All you can hope for is some fiscal responsibility, of which the top priority should be to keep debt sustainable, not at inflated proportions. I'd much rather my malinvestment be derived from my own acquired wealth, rather than money I borrowed becuase it was cheap and I wanted to take a big risk.

And where would you say the excess funds that the administration is pouring into the system fit in? Would this be on the order of "artificially low interest rates"?

This is from a Buchanan article:
"Obama is repeating the failed policies of Hoover and FDR, by refusing to let prices fall. Obama, with his intervention to prop up housing prices and Bernanke with his gushers of money to bail out bankrupt banks and businesses are creating a new bubble that will burst even more spectacularly."

Have you read the prognostications that there will be second, more severe, leg of this downturn, and that every trillion the government adds, adds a year to the recovery?

 

[Iriemon]

Thanks for giving an example of the difference between conclusions and contusions.

There is a point here I've kind of wondered about. Many folks blame the Fed for the 20s stock market speculation, claimin lower interest and making money more available fueled the market rise. Why wouldn't the same argument hold for tax cuts?

Seems to me that is one is going to argue that too much money in the system fueled the market rise, you'd have to acknowledge that low taxes had the same effect.

That is a good point. However, one has to assume that misallocations of resources on a grand scale only happens when the time-preference (interest rates) are altered artificially. If you're building something big for a later day, assuming that people are saving their money and you're looking to cash in on that later day, and suddenly an artificial force tricks people into splurging their money now with lower interest rates, you're going to be screwed, along with everyone else. That's essentially the Austrian business cycle.

Misallocations happen in the free market, sure, but one has to understand why hundreds of banks are failing today, or hundreds of stock brokers failed earlier with NASDAQ. Bad judgment isn't something shared by an entire industry. Not every homebuyer were idiots running up to 2007. Something else must be at play, and that is certainly true. So it's not really a matter of how much money being in the system, per se, than how that money is being used and how the time-preference of people using that money is being altered artificially.

I personally ascribe to the idiots theory -- or more accurately, the herd mentality in which few are able to predict when a market correction will occur. Not to say they are all idiots really -- it is very easy to sit in hindsight and say "everyone should have seen this coming". But speculation fueled by greed is what drives every "bubble".

 

[Truthmatters]

The result of his and his VP who took office after his death and ccontiunued his polices were the Crash of 1929 and the Great Depression.

You guys then did it to us again this time with your idiot insistance that the Free Market solves everthing.

try as you may history just keeps getting in the way of your stupidity.

Ah, so you are the one George Santayana was thinking of!

For informational purposes, I have to disabuse you of the use of "you guys." I have regularly, and proudly, proclaimed that I am a Conservative.

If you think, and here I use the term 'think' as the same kind of thinking that a pupa uses when it becomes a moth, that President Bush was either responsible for the meltdown, or that he was a Conservative, you'd be wrong for the, what, thousandth time today. New record?

Amazing steadfastness.

I'm fogetting nothing here , you and your little misers friend just amke things up.

Now tell me how the Post WWI economy was heading for a depression again?

 

[Iriemon]

The difference between tax cuts and artificially low interest rates is that tax cuts don't contribute to massive leveraging, whereas low interest rates do. Tax reductions offer businesses the ability to grow with more of their own money, but lower interest rates only lead to excessive debt in the end.

There's really no way to stop the misallocation of resources. It's inevitable. All you can hope for is some fiscal responsibility, of which the top priority should be to keep debt sustainable, not at inflated proportions. I'd much rather my malinvestment be derived from my own acquired wealth, rather than money I borrowed becuase it was cheap and I wanted to take a big risk.

And where would you say the excess funds that the administration is pouring into the system fit in? Would this be on the order of "artificially low interest rates"?

This is from a Buchanan article:
"Obama is repeating the failed policies of Hoover and FDR, by refusing to let prices fall. Obama, with his intervention to prop up housing prices and Bernanke with his gushers of money to bail out bankrupt banks and businesses are creating a new bubble that will burst even more spectacularly."

Have you read the prognostications that there will be second, more severe, leg of this downturn, and that every trillion the government adds, adds a year to the recovery?

I'm not sure how Buchanan could claim prices didn't fall -- there was massive deflation during the GD, and prices fell on the order of 25% I believe.

 

[Truthmatters]

Why Conservatives Are So Upset with Thomas Woods's Politically Incorrect History Book

Proff Woods is seen as a liar by all sides people

 

[mash107]

There is a point here I've kind of wondered about. Many folks blame the Fed for the 20s stock market speculation, claimin lower interest and making money more available fueled the market rise. Why wouldn't the same argument hold for tax cuts?

Seems to me that is one is going to argue that too much money in the system fueled the market rise, you'd have to acknowledge that low taxes had the same effect.

That is a good point. However, one has to assume that misallocations of resources on a grand scale only happens when the time-preference (interest rates) are altered artificially. If you're building something big for a later day, assuming that people are saving their money and you're looking to cash in on that later day, and suddenly an artificial force tricks people into splurging their money now with lower interest rates, you're going to be screwed, along with everyone else. That's essentially the Austrian business cycle.

Misallocations happen in the free market, sure, but one has to understand why hundreds of banks are failing today, or hundreds of stock brokers failed earlier with NASDAQ. Bad judgment isn't something shared by an entire industry. Not every homebuyer were idiots running up to 2007. Something else must be at play, and that is certainly true. So it's not really a matter of how much money being in the system, per se, than how that money is being used and how the time-preference of people using that money is being altered artificially.

I personally ascribe to the idiots theory -- or more accurately, the herd mentality in which few are able to predict when a market correction will occur. Not to say they are all idiots really -- it is very easy to sit in hindsight and say "everyone should have seen this coming". But speculation fueled by greed is what drives every "bubble".

When you're given easy money, it's very easy to be greedy? When you are tricked into splurging and consuming, rather than saving, that only feeds into a speculative bubble, no?

 

[mash107]

Why Conservatives Are So Upset with Thomas Woods's Politically Incorrect History Book

Proff Woods is seen as a liar by all sides people

Pro hint: googling Thomas Woods for a negative article on his anti-authoritarian views and stumbling on a pro-authoritarian site doesn't make you smart.

 

[Iriemon]

The result of his and his VP who took office after his death and ccontiunued his polices were the Crash of 1929 and the Great Depression.

You guys then did it to us again this time with your idiot insistance that the Free Market solves everthing.

try as you may history just keeps getting in the way of your stupidity.

I'd take the 2 year free market solution to a Depression of your 15 year fascist solution to a Depression any day.

The problem was that (despite the low tax rates Harding had passed) GDP had fallen 25% real over three years before the fascist solution happened in 1933 (now we are getting to the point my previous post is relevant again!)

The '20 recession was not anything like that in terms of GDP decline. It was a post war recession, caused by the sudden decline in war production (similar to the post WWII recession), as opposed to a financial system meltdown (like the GD and current recession). As was the case post WWII, industry was able to retool to consumer goods and got cranking again in relatively short order.

By 1933, the economy had falled by a huge amount over the previous three years. Like today, taxes were already low. Low taxes had not prevented the GD, and, like today, a cash starved Govt was not able cut taxes further. The problem in the GD wasn't that people didn't have money (tho' lots didn't) but that those that had the $$ weren't spending it.

If the folks getting tax cuts don't spent the extra money, tax cuts only marginally stimulate the economy.

 

[PoliticalChic]

I'm fogetting nothing here , you and your little misers friend just amke things up.

Now tell me how the Post WWI economy was heading for a depression again?

Did someone steal the cork out of your lunch?

I think you are " fogetting" the letter 'r' at least.

So much to teach, so little time. Post WWI was the Wilson recession of 1920-21. Harding performed excellently as a recession-fighter by allowing prices to fall, wages to fall- and thus led to full employment, and by July of '21 we were on our way to the "Roaring Twentiies."

Note: Harding did the exact opposite of the policies of Hoover, FDR, and President Obama. Judge the results for yourself.

If that is beyond you, just take my word for it.

As a gesture of my humanity, I add this for your edification:
"For all the differences between the United States and Europe, we share a common challenge: how to improve the social well-being of our citizens without a massive growth in the size and intrusiveness of government. We're convinced that conservatism--properly understood--offers the surest road to social justice." Rick Santorum

 

[Truthmatters]

Cohen’s worry is that the Woods volume, which already had reached the best seller lists, was being grabbed up on the campuses and was a strong part of what he calls “a boomlet in far-right attacks on mainstream history.” Cohen does give lip service to the argument that it is good that many “liberal pieties are being challenged,” but he leaves this to a brief comment. His real concern is that Woods’s book is “full of dubious assertions, small and large,” and that the author makes “ideologically loaded” and “perverse” arguments. It amounts, he writes, to “rewriting reality to suit an ideological agenda.”

Reviewing the same book in the neo-conservative Weekly Standard, columnist and author Max Boot joins the assault on the Woods volume. It is clear, particularly from the tough-minded and accurate blast by Boot, that Adam Cohen is indeed correct: Thomas E. Woods Jr. has written a propagandastic, cartoon-like portrait of the United States, which as Boot asserts, treats history as a “Bizarro world.” His book is, as Max Boot asserts, a truly “absurd manifesto".