Roosevelt's Great Depression

[Toro]

Until author Amity Shlaes and her 2013 book about Coolidge, titled Coolidge it was widely accepted the the policies of Coolidge, often referred to as 'laissez-faire', were the cause of the stock market crash that started the Great Depression.

That narrative has been around in economics decades before Amity Shales.

Shales isn't important.

 

[gipper]

PC, I try not to treat your rambling threads seriously, but you are obviously too young to know people like my parents who lived through FDR's leadership.

Even my Dad, who was a staunch Nixon supporter, admitted that FDR was a great president. His leadership got America through the Depression and the War. It's why he was elected four times.

Well Joey...if your daddy said Stalin's Stooge was great, then he must have been...but then he raised you , so that makes him suspect.

 

[Dad2three]

HISTORIAN? Oh right he's busy rewritting 'history' to fit the conservatives narrative, lol

This history?

1. Here are three looming debilitations of Franklin Roosevelt:

a. His attachment to Joseph Stalin, and, in large measure, acceptance of communistm

b. His monumental efforts to subvert the United States Constitution

c. His inept handling of the recession, turning into and extending the Depression.

YOU are a lying POS moron. You mean Harding/Coolidge's depression FDR inherited and the reason why the American people elected FDR 4 times?

Historian? lol

Coolidge didn't end with a Depression, you Pathological Liar

Nope, he just handed off to Hoover the end of the bubble (like Reagan's AND Dubya's), that popped 6 months later Bubba, lol

SOME critical thinking?

^ ******* Liar. 100% total, ******* Liar

Good rebuttal Bubba, like usual fact filled and logical, lol

 

[Dad2three]

was meant to indicate the freedom of regulation and control which Coolidge gave the entities that caused the bubble to collapse.

dear, capitalism does not give a corporation freedom of regulation. It is a harsh Darwinian discipline wherein you only survive by offering the best jobs and products in a very competitive world.

Is this still over your head?

A Failure of Capitalism (more fully entitled A Failure of Capitalism: The Crisis of '08 and the Descent into Depression) is a major 2009 nonfiction book by Judge Richard Posner, the most-cited American legal scholar in history, among the most respected judges in the United States (as of 1999), and a major proponent of the economic analysis of law. The book is significant in Posner's criticism of President George W. Bush and his administration's policies and the response to the fiscal crisis, as well as Posner's movement away from his past well-known advocacy of free-market capitalism, The book has been primarily noted not for his criticism of progressive government policies (which he attacks again for good measure), but rather his critique of laissez-faire capitalism and its ideologues.

A Failure of Capitalism - Wikipedia the free encyclopedia

Richard Allen Posner is an American jurist, legal theorist, and economist

He is a leading figure in the field of law and economics, and was identified by The Journal of Legal Studies as the most cited legal scholar of the 20th century



Richard Posner - Wikipedia the free encyclopedia

 

[CrusaderFrank]

This history?

1. Here are three looming debilitations of Franklin Roosevelt:

a. His attachment to Joseph Stalin, and, in large measure, acceptance of communistm

b. His monumental efforts to subvert the United States Constitution

c. His inept handling of the recession, turning into and extending the Depression.

YOU are a lying POS moron. You mean Harding/Coolidge's depression FDR inherited and the reason why the American people elected FDR 4 times?

Historian? lol

Coolidge didn't end with a Depression, you Pathological Liar

Nope, he just handed off to Hoover the end of the bubble (like Reagan's AND Dubya's), that popped 6 months later Bubba, lol

SOME critical thinking?

^ ******* Liar. 100% total, ******* Liar

melt down much? Facts are facts Frank1400PennAve

I won't debate pathological liars. Waste o' My Time

 

[CrusaderFrank]

This history?

1. Here are three looming debilitations of Franklin Roosevelt:

a. His attachment to Joseph Stalin, and, in large measure, acceptance of communistm

b. His monumental efforts to subvert the United States Constitution

c. His inept handling of the recession, turning into and extending the Depression.

YOU are a lying POS moron. You mean Harding/Coolidge's depression FDR inherited and the reason why the American people elected FDR 4 times?

Historian? lol

Coolidge didn't end with a Depression, you Pathological Liar

Nope, he just handed off to Hoover the end of the bubble (like Reagan's AND Dubya's), that popped 6 months later Bubba, lol

SOME critical thinking?

^ ******* Liar. 100% total, ******* Liar

Good rebuttal Bubba, like usual fact filled and logical, lol

Dude, you're a Liar. No point in debating the completely dishonest

 

[EdwardBaiamonte]

A Failure of Capitalism - Wikipedia the free encyclopedia

Richard Allen Posner is an American jurist, legal theorist, and economist

He is a leading figure in the field of law and economics, and was identified by The Journal of Legal Studies as the most cited legal scholar of the 20th century



Richard Posner - Wikipedia the free encyclopedia

can dumbto3 tell us what the greatest failure of capitalism is? Was it instantly eliminating 40% of the worlds poverty in China?

 

[Dad2three]

YOU are a lying POS moron. You mean Harding/Coolidge's depression FDR inherited and the reason why the American people elected FDR 4 times?

Historian? lol

Coolidge didn't end with a Depression, you Pathological Liar

Nope, he just handed off to Hoover the end of the bubble (like Reagan's AND Dubya's), that popped 6 months later Bubba, lol

SOME critical thinking?

^ ******* Liar. 100% total, ******* Liar

melt down much? Facts are facts Frank1400PennAve

I won't debate pathological liars. Waste o' My Time

I guess it helps your position since you NEVER have facts, truth or being on the correct side of history on your side!

 

[Dad2three]

YOU are a lying POS moron. You mean Harding/Coolidge's depression FDR inherited and the reason why the American people elected FDR 4 times?

Historian? lol

Coolidge didn't end with a Depression, you Pathological Liar

Nope, he just handed off to Hoover the end of the bubble (like Reagan's AND Dubya's), that popped 6 months later Bubba, lol

SOME critical thinking?

^ ******* Liar. 100% total, ******* Liar

Good rebuttal Bubba, like usual fact filled and logical, lol

Dude, you're a Liar. No point in debating the completely dishonest

Stop projecting Bubba

 

[Dad2three]

A Failure of Capitalism - Wikipedia the free encyclopedia

Richard Allen Posner is an American jurist, legal theorist, and economist

He is a leading figure in the field of law and economics, and was identified by The Journal of Legal Studies as the most cited legal scholar of the 20th century



Richard Posner - Wikipedia the free encyclopedia

can dumbto3 tell us what the greatest failure of capitalism is? Was it instantly eliminating 40% of the worlds poverty in China?

And yet the capitalism YOU want to practice brought US the first GOP great depression, Ronnie's S&L crisis and now Dubya's great recession. Weird

 

[EdwardBaiamonte]

And yet the capitalism YOU want to practice brought US the first GOP great depression,

dumbto3 has learned 110 times that Hoover and FDR were liberals yet still blames Depression on GOP while experts agree it was caused by mistaken monetary policy. You can't be dumber
than dumbto3.

 

[Dad2three]

And yet the capitalism YOU want to practice brought US the first GOP great depression,

dumbto3 has learned 110 times that Hoover and FDR were liberals yet still blames Depression on GOP while experts agree it was caused by mistaken monetary policy. You can't be dumber
than dumbto3.

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.


To see why the Federal Reserve did not cause this contraction, recall that the Fed has at least two methods of increasing the money supply. By far the most common and important method is buying U.S. debt from commercial banks, in the form of U.S. securities. The lesser way is to cut the prime interest rate that the Fed charges commercial banks.

Between October 1929 and February 1930, the Fed actually pumped significant money into the economy. It made major purchases of U.S. securities, and cut interest rates from 6 to 4 percent.

After this sudden infusion of money, however, the Fed made only very modest purchases of securities. It cut the discount rate only twice between March 1930 and September 1931. In the final months of 1931 it briefly raised the rate twice, but then cut it again in 1932. The modest security purchases counterbalanced the brief raises in rates and resulted in no significant change in the amount of money available to the public. However, this period of inaction by the Fed is the target of much criticism, as we shall see.

In 1932, the Fed overcame its idleness and once again made large purchases of U.S. securities.

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


lol

 

[Dad2three]

And yet the capitalism YOU want to practice brought US the first GOP great depression,

dumbto3 has learned 110 times that Hoover and FDR were liberals yet still blames Depression on GOP while experts agree it was caused by mistaken monetary policy. You can't be dumber
than dumbto3.

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.

Roosevelt would go on to create the Federal Deposit Insurance Commission to protect the American economy from bank runs in the future. And although the 1987 crash on Wall Street was the largest in American history, these safeguards worked admirably to prevent a bank panic from depressing the economy.



WHAT ROLE DID THE FED PLAY IN CAUSING THE GREAT DEPRESSION

 

[EdwardBaiamonte]

Friedman's arguments are not shared by his peers in the economics profession,

you cant be dumber than dumto3. Bernanke is the worlds expert on the Depression and agrees 100% with Friedmans arguments!

 

[EdwardBaiamonte]

." 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.

this is too stupid and liberal for words. Friedman's disdain for govt obviously did not include the govt's printing of money and maintainance of the correct amount in circulation!!

No one could believe the perfect liberal stupidity of dumbto3. Why not try Econ 101?? Did you ever think of that?

 

[Dad2three]

Friedman's arguments are not shared by his peers in the economics profession,

you cant be dumber than dumto3. Bernanke is the worlds expert on the Depression and agrees 100% with Friedmans arguments!

2 whole guys? You keep putting out that Bernake was an expert BECAUSE he wrote his thesis on the depression, THAT makes you an expert? lol


So NO you can't refute a well reasoned explanation that it was BANK FAILURE that caused the money supply to decrease, BUT you'll stick wit Uncle Milties LIE anyways? How conservative of you Bubba


The Federal Reserve actually has little to no control over the money supply. They control the base money (inside money), a small fraction of the money supply. In the fractional reserve system, banks control 90 percent of the money supply. So how does this system work? For instance, if you deposit $100,000 in a savings account, your bank does not keep $100,000. Instead, the bank keeps a fraction of that money (10 percent), and lends out the rest, or $90,000. Essentially, the bank gives you a $100,000 credit on your deposit, and by lending out the $90,000, the bank has turned the initial $100,000 into $190,000. The person to whom the bank lends the $90,000 deposits that money, and then the bank lends out 90 percent of the $90,000, which is $81,000. This cycle continues until eventually the initial $100,000 deposit becomes $1,000,000. This is the essence of the fractional reserve banking system.

Many on the right correctly note that the fractional reserve banking system increases the money supply, and they also understand that real money is created through hard work and the building of human capital. However, they fail to understand the importance of the fractional reserve system to the credit creation process.


Dispelling the Myth Concerning the Federal Reserve


BANK FAILURES DUMMY, DESPITE RIGHT WING MYTHOLOGY PUSHED BY UNCLE MILTIE!

 

[Dad2three]

." 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.

this is too stupid and liberal for words. Friedman's disdain for govt obviously did not include the govt's printing of money and maintainance of the correct amount in circulation!!

No one could believe the perfect liberal stupidity of dumbto3. Why not try Econ 101?? Did you ever think of that?

The Federal Reserve does not simply print money out of thin air

Dispelling the Myth Concerning the Federal Reserve

Federal Reserve Board Chairman Ben Bernanke was the host of his own version of Discovery Channel's television series MythBusters this week.

Instead of explaining if it's possible to beat a lie detector test, however, he tried to rid long-held myths like the Fed's power to print money at will. Let's hope certain members of Congress were listening.

As part of a four-part series, Bernanke gave his final two lectures to business students at George Washington University on the Fed's role and response to the recent financial crisis. But along the way, he clarified certain misperceptions of the central bank to some 30 students — and the rest of the public, who was tuned in via Web cast.

Bernanke Seeks to Dispel Fed Myths - People Article - American Banker

 

[Toro]

And yet the capitalism YOU want to practice brought US the first GOP great depression,

dumbto3 has learned 110 times that Hoover and FDR were liberals yet still blames Depression on GOP while experts agree it was caused by mistaken monetary policy. You can't be dumber
than dumbto3.

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.


To see why the Federal Reserve did not cause this contraction, recall that the Fed has at least two methods of increasing the money supply. By far the most common and important method is buying U.S. debt from commercial banks, in the form of U.S. securities. The lesser way is to cut the prime interest rate that the Fed charges commercial banks.

Between October 1929 and February 1930, the Fed actually pumped significant money into the economy. It made major purchases of U.S. securities, and cut interest rates from 6 to 4 percent.

After this sudden infusion of money, however, the Fed made only very modest purchases of securities. It cut the discount rate only twice between March 1930 and September 1931. In the final months of 1931 it briefly raised the rate twice, but then cut it again in 1932. The modest security purchases counterbalanced the brief raises in rates and resulted in no significant change in the amount of money available to the public. However, this period of inaction by the Fed is the target of much criticism, as we shall see.

In 1932, the Fed overcame its idleness and once again made large purchases of U.S. securities.

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


lol

Friedman and Ben Bernanke disagree.

The next episode studied by Friedman and Schwartz, another tightening, occurred in September 1931, following the sterling crisis. In that month, a wave of speculative attacks on the pound forced Great Britain to leave the gold standard. Anticipating that the United States might be the next to leave gold, speculators turned their attention from the pound to the dollar. Central banks and private investors converted a substantial quantity of dollar assets to gold in September and October of 1931. The resulting outflow of gold reserves (an "external drain") also put pressure on the U.S. banking system (an "internal drain"), as foreigners liquidated dollar deposits and domestic depositors withdrew cash in anticipation of additional bank failures. Conventional and long-established central banking practice would have mandated responses to both the external and internal drains, but the Federal Reserve--by this point having forsworn any responsibility for the U.S. banking system, as I will discuss later--decided to respond only to the external drain. As Friedman and Schwarz wrote, "The Federal Reserve System reacted vigorously and promptly to the external drain. . . . On October 9 [1931], the Reserve Bank of New York raised its rediscount rate to 2-1/2 per cent, and on October 16, to 3-1/2 per cent--the sharpest rise within so brief a period in the whole history of the System, before or since (p. 317)." This action stemmed the outflow of gold but contributed to what Friedman and Schwartz called a "spectacular" increase in bank failures and bank runs, with 522 commercial banks closing their doors in October alone. The policy tightening and the ongoing collapse of the banking system caused the money supply to fall precipitously, and the declines in output and prices became even more virulent. ...​

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

IOW, Fed policy accelerated the bank run which decreased the money supply.

 

[regent]

And yet the capitalism YOU want to practice brought US the first GOP great depression,

dumbto3 has learned 110 times that Hoover and FDR were liberals yet still blames Depression on GOP while experts agree it was caused by mistaken monetary policy. You can't be dumber
than dumbto3.

Why does the GOP work for the election of liberals on a GOP ticket? Conservatives work hard and contribute money supposedly for the election of conservatives and the party nominates Hoover. Do they know the difference between liberalism and conservatism?
Was Coolidge also a liberal and what of all the others GOP presidents what were they? I know Lincoln has been suggested as a liberal but the party was just starting then and could go either way. Does the GOP still nominate liberals like Hoover?

 

[Dad2three]

And yet the capitalism YOU want to practice brought US the first GOP great depression,

dumbto3 has learned 110 times that Hoover and FDR were liberals yet still blames Depression on GOP while experts agree it was caused by mistaken monetary policy. You can't be dumber
than dumbto3.

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.


To see why the Federal Reserve did not cause this contraction, recall that the Fed has at least two methods of increasing the money supply. By far the most common and important method is buying U.S. debt from commercial banks, in the form of U.S. securities. The lesser way is to cut the prime interest rate that the Fed charges commercial banks.

Between October 1929 and February 1930, the Fed actually pumped significant money into the economy. It made major purchases of U.S. securities, and cut interest rates from 6 to 4 percent.

After this sudden infusion of money, however, the Fed made only very modest purchases of securities. It cut the discount rate only twice between March 1930 and September 1931. In the final months of 1931 it briefly raised the rate twice, but then cut it again in 1932. The modest security purchases counterbalanced the brief raises in rates and resulted in no significant change in the amount of money available to the public. However, this period of inaction by the Fed is the target of much criticism, as we shall see.

In 1932, the Fed overcame its idleness and once again made large purchases of U.S. securities.

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


lol

Friedman and Ben Bernanke disagree.

The next episode studied by Friedman and Schwartz, another tightening, occurred in September 1931, following the sterling crisis. In that month, a wave of speculative attacks on the pound forced Great Britain to leave the gold standard. Anticipating that the United States might be the next to leave gold, speculators turned their attention from the pound to the dollar. Central banks and private investors converted a substantial quantity of dollar assets to gold in September and October of 1931. The resulting outflow of gold reserves (an "external drain") also put pressure on the U.S. banking system (an "internal drain"), as foreigners liquidated dollar deposits and domestic depositors withdrew cash in anticipation of additional bank failures. Conventional and long-established central banking practice would have mandated responses to both the external and internal drains, but the Federal Reserve--by this point having forsworn any responsibility for the U.S. banking system, as I will discuss later--decided to respond only to the external drain. As Friedman and Schwarz wrote, "The Federal Reserve System reacted vigorously and promptly to the external drain. . . . On October 9 [1931], the Reserve Bank of New York raised its rediscount rate to 2-1/2 per cent, and on October 16, to 3-1/2 per cent--the sharpest rise within so brief a period in the whole history of the System, before or since (p. 317)." This action stemmed the outflow of gold but contributed to what Friedman and Schwartz called a "spectacular" increase in bank failures and bank runs, with 522 commercial banks closing their doors in October alone. The policy tightening and the ongoing collapse of the banking system caused the money supply to fall precipitously, and the declines in output and prices became even more virulent. ...​

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

IOW, Fed policy accelerated the bank run which decreased the money supply.

SURE they did, by NOT doing anything they did that? You mean Uncle Miltie WANTED the fed to use actions of the federal reserve? lol

Friedman and Schwartz claimed that the fall in the money supply turned what might have been an ordinary recession into a catastrophic depression, itself an arguable point. But even if we grant that point for the sake of argument, one has to ask whether the Federal Reserve, which after all did increase the monetary base, can be said to have caused the fall in the overall money supply. At least initially, Friedman and Schwartz didn't say that. What they said instead was that the Fed could have prevented the fall in the money supply, in particular by riding to the rescue of the failing banks during the crisis of 1930–1931. If the Fed had rushed to lend money to banks in trouble, the wave of bank failures might have been prevented, which in turn might have avoided both the public's decision to hold cash rather than bank deposits, and the preference of the surviving banks for stashing deposits in their vaults rather than lending the funds out. And this, in turn, might have staved off the worst of the Depression.

An analogy may be helpful here. Suppose that a flu epidemic breaks out, and later analysis suggests that appropriate action by the Centers for Disease Control could have contained the epidemic. It would be fair to blame government officials for failing to take appropriate action. But it would be quite a stretch to say that the government caused the epidemic, or to use the CDC's failure as a demonstration of the superiority of free markets over big government.

Yet many economists, and even more lay readers, have taken Friedman and Schwartz's account to mean that the Federal Reserve actually caused the Great Depression—that the Depression is in some sense a demonstration of the evils of an excessively interventionist government. And in later years, as I've said, Friedman's assertions grew cruder, as if to feed this misperception.



..By 1976 Friedman was telling readers of Newsweek that "the elementary truth is that the Great Depression was produced by government mismanagement,"


LOL, THEY WANTED MORE ACTION BY GOV'T? SERIOUSLY???



Economist s View Monetary Policy and the Great Depression