A Little "What If"

[DudleySmith]

lol obviously a lot of people spend too much time in Freeperville ... Herbert Hoover was also one of those reviled 'Progressives', hung out at their salons in Washington, and advocated a lot of progressive programs.

 

[DudleySmith]

Where was God when millions of Americans were starving?
It was FDR who came to the rescue

Well we know where the 'conservatives' who were largely responsible for the Depression were: They were hiding behind the walls of their private estates screaming for the Federal government to protect them their victims.

 

[rightwinger]

Well we know where the 'conservatives' who were largely responsible for the Depression were: They were hiding behind the walls of their private estates screaming for the Federal government to protect them their victims.

During the Great Depression, Republicans screamed to rescue the banks

FDR chose to rescue the people

 

[DudleySmith]

During the Great Depression, Republicans screamed to rescue the banks

FDR chose to rescue the people

Hoover lost the election because he did what the rich gamblers wanted him to do, sent in the Army to bayonet veterans holding a peaceful protest. Then they wonder why they can't even beat criminal loons like Biden and Harris and Obama in elections. Sociopaths never get it, they're always puzzled and confused, which is why they rely on ideologies, whether left or tight wingers.

 

[Pellinore]

Without McKinley's death, there wouldn't have been a Roosevelt-Taft split within the GOP, allowing Wilson to split the vote and win in 1912. The Republican party would have continued their domination of the White House, but the grassroots demand for progressivism was pretty strong. All of that points to a good chance that a Progressive Republican would probably have still been elected in the 00's or 10's, maybe even TR, maybe even during—gulp—World War I. The war, though, was an inevitability in an arena far larger than our nation, so it still would have happened regardless of who shot whom (over here, anyway).

All of that cool stuff said, I don't see anything that necessarily would have diverted the next big historical wave, which was the effects of the banks during the 1920s. This was followed by the Depression and the demand for the government to change its focus from laissez-faire to an activist government. Unless something drastic happened in a butterfly-wings sort of way, I think all of the historical forces would have slammed together in a more-or-less similar way to how they actually did.

It would have spared six or seven generations of high school history students from having to learn how to spell and pronounce "Czolgosz," though.

 

[Mushroom]

All of that cool stuff said, I don't see anything that necessarily would have diverted the next big historical wave, which was the effects of the banks during the 1920s.

Which the President would have had no effect on.

Some are now wondering if that will be repeated in the very near future.

It must be remembered, that the US does not live in a bubble, and is affected by a great many things internationally. The Depression? That was not a "US Only" event, it was a global event and every nation on the planet was affected to a degree or another. In the US, we saw deflation and a depression, in others (most spectacularly) saw massive inflation. But the effect was still the same. Economies all across the Americas, Europe, and Asia crashed. It just took a bit longer to affect the US is all.

And there are three major things that happened less than a decade before it. A world war, a global pandemic, and a massive increase in credit combined with speculation. Many of those conditions are ripe again, and the increasing cycle of financial bubbles (especially in the US over land) shows that our economy is not as stable as many would believe. And I have heard more than one economist say a depression and deflation is due in the US, to correct the decades of inflation.

 

[Pellinore]

Which the President would have had no effect on.

Some are now wondering if that will be repeated in the very near future.

It must be remembered, that the US does not live in a bubble, and is affected by a great many things internationally. The Depression? That was not a "US Only" event, it was a global event and every nation on the planet was affected to a degree or another. In the US, we saw deflation and a depression, in others (most spectacularly) saw massive inflation. But the effect was still the same. Economies all across the Americas, Europe, and Asia crashed. It just took a bit longer to affect the US is all.

And there are three major things that happened less than a decade before it. A world war, a global pandemic, and a massive increase in credit combined with speculation. Many of those conditions are ripe again, and the increasing cycle of financial bubbles (especially in the US over land) shows that our economy is not as stable as many would believe. And I have heard more than one economist say a depression and deflation is due in the US, to correct the decades of inflation.

No arguments there. It's no doubt that it affected the world over, but how much of it do you think America caused? I'm especially thinking of unconstrained American bankers, lending piles and piles of money to hard-hit Europe and American consumers.

 

[Mushroom]

No arguments there. It's no doubt that it affected the world over, but how much of it do you think America caused? I'm especially thinking of unconstrained American bankers, lending piles and piles of money to hard-hit Europe and American consumers.

The biggest single cause of the Great Depression ultimately was the "Gold Standard". That pegged almost every currency on the planet to have it's value match that of a commodity that was commonly traded, and tended to go up and down in value. When times are good, the value goes up, making the currency stronger as more people have enough extra currency to invest in such things as metal commodities.

But in bad times, people then sell off those metals. Which then drives down the price, and actually then has the reverse effect of making the currency worth less. To be honest, McKinley if he had lived might have eased that a bit, because he was a big supporter of the US not using the "Gold Standard", but a "Bi-Metal Standard" of both Gold and Silver. It would not have been enough to save it from the Depression, but having two metals would have given the economy a bit more space to adapt.

But the single most common factor globally is that every single nation that used the "Gold Standard" saw their economies collapse. And it had not a damned thing to do with bankers. And you have the banking collapse backwards. The stock market was in a bubble, and they were lending a lot of cash to people to speculate on stocks. When the market "crashed" (it was not all that bad of a crash actually, the contemporary news actually almost barely commented on it at the time), it was right before many of those loans became due, and the borrowers could no longer repay them. The banks did not "lend piles and piles of cash to hard-hit" people and countries", they were reeling as they had huge amounts of money already on loan, that they knew would never be paid back. And in the next several years one after another many collapsed as they still had outstanding balances that they could no longer cover.

But that is true of any bubble. Stocks, property, businesses, even tulips. Bubbles are a cycle that always have and always will repeat. Not driven by banks or businesses, but by the common people in their own greed. LA is a classic example. A house sold in 1975 for $35k is now valued at over $700k. And before the 2007 bubble burst was actually valued at around $975k. A classic bubble, because that is actually a tiny 2 bedroom bungalow at under 780 square feet. And I have seen offers on similar houses in the area of over $1.2 million being refused.

LA eventually is going to see another major crash, just like it did a decade ago. When suddenly people lose those grossly overvalued houses, and the bank is then left with the note on a property that lost 20% or more of its value.

 

[Pellinore]

The biggest single cause of the Great Depression ultimately was the "Gold Standard". That pegged almost every currency on the planet to have it's value match that of a commodity that was commonly traded, and tended to go up and down in value. When times are good, the value goes up, making the currency stronger as more people have enough extra currency to invest in such things as metal commodities.

But in bad times, people then sell off those metals. Which then drives down the price, and actually then has the reverse effect of making the currency worth less. To be honest, McKinley if he had lived might have eased that a bit, because he was a big supporter of the US not using the "Gold Standard", but a "Bi-Metal Standard" of both Gold and Silver. It would not have been enough to save it from the Depression, but having two metals would have given the economy a bit more space to adapt.

But the single most common factor globally is that every single nation that used the "Gold Standard" saw their economies collapse. And it had not a damned thing to do with bankers. And you have the banking collapse backwards. The stock market was in a bubble, and they were lending a lot of cash to people to speculate on stocks. When the market "crashed" (it was not all that bad of a crash actually, the contemporary news actually almost barely commented on it at the time), it was right before many of those loans became due, and the borrowers could no longer repay them. The banks did not "lend piles and piles of cash to hard-hit" people and countries", they were reeling as they had huge amounts of money already on loan, that they knew would never be paid back. And in the next several years one after another many collapsed as they still had outstanding balances that they could no longer cover.

But that is true of any bubble. Stocks, property, businesses, even tulips. Bubbles are a cycle that always have and always will repeat. Not driven by banks or businesses, but by the common people in their own greed. LA is a classic example. A house sold in 1975 for $35k is now valued at over $700k. And before the 2007 bubble burst was actually valued at around $975k. A classic bubble, because that is actually a tiny 2 bedroom bungalow at under 780 square feet. And I have seen offers on similar houses in the area of over $1.2 million being refused.

LA eventually is going to see another major crash, just like it did a decade ago. When suddenly people lose those grossly overvalued houses, and the bank is then left with the note on a property that lost 20% or more of its value.

Thanks for that. I'm a historian but not an economist, so I'm always interested to hear new info about how the markets and banks affect each other and the world.

That said, I worry about a housing bubble too. I feel as if we're stumbling right in to it.

 

[Mushroom]

That said, I worry about a housing bubble too. I feel as if we're stumbling right in to it.

Until around 1998, home prices pretty evenly increased within 1-2% of inflation. But in the last 20 years or so, it has actually increased sharply. And today, home values are increasing at a rate roughly 50% faster than inflation. But it stopped from a high in 2005, and took a sharp drop to at about the level it would have been in 2013 to what it would have been without the bubble, then started going up again. And in 2020 passed the level it had been previously in 2005.

So it is obvious we are in yet another bubble. Overpriced houses, that being sold now being mortgaged at rates roughly 50% higher than the actual real world value of the house. Which means just like 2007, when it pops expect once again for lots of houses to be foreclosed on, and banks to be taking it in the butt. I am not an economist, but one of the things I have long tracked are historical trends. And bubbles is a big one. Stocks, precious metals, home prices, a great many have bubbles. And things always look awesome, until that bubble pops. Then the entire house of cards collapses, normally until the price readjusts itself to the realistic value they would have had without the bubble.

By now, any time I see the price of anything increasing sharply over inflation, I start to look to see if it is a bubble. And this next housing bubble will likely be as bad or worse than the 2007-2012 one. Those that bought then will probably be fine, but those that have purchased since then (especially in the last few years) will likely take it in hard. As they will then find they own more money on their property than it is worth. And with little to no equity in them, many will just follow and leave also.