Top 3 Myths About the Great Depression and the New Deal

[bigrebnc1775]

asked for the votes by the party members. You guys are only half way there. Do I always have to make your arguments for you. Your opinions require proof. Also remember for the revenue amendment it required 3/4s of the states.

You guys really need to think before shooting yourselves in the foot.

I am waiting for the vote by party members on the revenue act and for the frb act in 1913.

Ante up, podjos.

You got busted and now you whine and try to move the goal post. **** you.

 

[bripat9643]

And we are supposed to believe the Austrian school of economic destruction and plutocracy advocates? Without the Fed the US dollar would have NEVER become the international monetary standard...EVER!

That's certainly true, because prior to that gold was the monetary standard in the U.S. the dollar simply denoted a certain fixed quantity of gold.

What do you think people would prefer to hold, notes exchangeable for gold, or worthless fiat notes that the federal government has debased to the point where they are worth less than 5% of their original value?

Hoover and the Feds followed the advice of the the Austrian school...it led to the great depression.

The advice of the Austrians was to never create a central bank, so how can a central bank follow the advice of the Austrians?

The Federal Reserve took almost no steps to halt the slide into the Great Depression over 1929–33. Instead, the Federal Reserve acted as if appropriate policy was not to try to avoid the oncoming Great Depression, but to allow it to run its course and “liquidate” the unprofitable portions of the private economy.

The Federal Reserve created the panic by inflating the supply of credit. Once you do that, it has to collapse at some point when people realize that there has been too much investment in the industries that received the bulk of the new money.

In adopting such “liquidationist” policies, the Federal Reserve was merely following the recommendations provided by an economic theory of depressions that was in fact common before the Keynesian Revolution and was held by economists like Friedrich Hayek, Lionel Robbins, and Joseph Schumpeter.

ROFL! I challenge you to find any classical economist recommending a "liquidationist" policy. I've never heard of such a thing until you posted it.

 

[Bfgrn]

And we are supposed to believe the Austrian school of economic destruction and plutocracy advocates? Without the Fed the US dollar would have NEVER become the international monetary standard...EVER!

That's certainly true, because prior to that gold was the monetary standard in the U.S. the dollar simply denoted a certain fixed quantity of gold.

What do you think people would prefer to hold, notes exchangeable for gold, or worthless fiat notes that the federal government has debased to the point where they are worth less than 5% of their original value?

Hoover and the Feds followed the advice of the the Austrian school...it led to the great depression.

The advice of the Austrians was to never create a central bank, so how can a central bank follow the advice of the Austrians?

The Federal Reserve took almost no steps to halt the slide into the Great Depression over 1929–33. Instead, the Federal Reserve acted as if appropriate policy was not to try to avoid the oncoming Great Depression, but to allow it to run its course and “liquidate” the unprofitable portions of the private economy.

The Federal Reserve created the panic by inflating the supply of credit. Once you do that, it has to collapse at some point when people realize that there has been too much investment in the industries that received the bulk of the new money.

In adopting such “liquidationist” policies, the Federal Reserve was merely following the recommendations provided by an economic theory of depressions that was in fact common before the Keynesian Revolution and was held by economists like Friedrich Hayek, Lionel Robbins, and Joseph Schumpeter.

ROFL! I challenge you to find any classical economist recommending a "liquidationist" policy. I've never heard of such a thing until you posted it.

Contemplating the wreck of his country's economy and his own political career, Herbert Hoover wrote bitterly in retrospect about those in his administration who had advised inaction during the downslide:

The 'leave-it-alone liquidationists' headed by Secretary of the Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate'.He held that even panic was not altogether a bad thing. He said: 'It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people'

But Hoover had been one of the most enthusiastic proponents of "liquidationism" during the Great Depression. And the unwillingness to use policy to prop up the economy during the slide into the Depression was backed by a large chorus, and approved by the most eminent economists.

For example, from Harvard Joseph Schumpeter argued that there was a "presumption against remedial measures which work through money and credit. Policies of this class are particularly apt to produce additional trouble for the future." From Schumpeter's perspective, "depressions are not simply evils, which we might attempt to suppress, butforms of something which has to be done, namely, adjustment to change." This socially productive function of depressions creates "the chief difficulty" faced by economic policy makers. For "most of what would be effective in remedying a depression would be equally effective in preventing this adjustment."

From London, Friedrich Hayek found it:

...still more difficult to see what lasting good effects can come from credit expansion. The thing which is most needed to secure healthy conditions is the most speedy and complete adaptation possible of the structure of production.If the proportion as determined by the voluntary decisions of individuals is distorted by the creation of artificial demand resources [are] again led into a wrong direction and a definite and lasting adjustment is again postponed.The only way permanently to 'mobilise' all available resources is, thereforeto leave it to time to effect a permanent cure by the slow process of adapting the structure of production...

Hayek and company believed that enterprises are gambles which sometimes fail: a future comes to pass in which certain investments should not have been made. The best that can be done in such circumstances is to shut down those production processes that turned out to have been based on assumptions about future demands that did not come to pass. The liquidation of such investments and businesses releases factors of production from unprofitable uses; they can then be redeployed in other sectors of the technologically dynamic economy. Without the initial liquidation the redeployment cannot take place. And, said Hayek, depressions are this process of liquidation and preparation for the redeployment of resources.

As Schumpeter put it, policy does not allow a choice between depression and no depression, but between depression now and a worse depression later: "inflation pushed far enough [would] undoubtedly turn depression into the sham prosperity so familiar from European postwar experience, [and]... would, in the end, lead to a collapse worse than the one it was called in to remedy." For "recovery is sound only if it does come of itself. For any revival which is merely due to artificial stimulus leaves part of the work of depressions undone and adds, to an undigested remnant of maladjustment, new maladjustment of its own which has to be liquidated in turn, thus threatening business with another [worse] crisis ahead"

This doctrine--that in the long run the Great Depression would turn out to have been "good medicine" for the economy, and that proponents of stimulative policies were shortsighted enemies of the public welfare--drew anguished cries of dissent from those less hindered by their theoretical blinders. British economist Ralph Hawtrey scorned those who, like Robbins and Hayek, wrote at the nadir of the Great Depression that the greatest danger the economy faced was inflation. It was, Hawtrey said, the equivalent of "Crying, 'Fire! Fire!' in Noah's flood."

John Maynard Keynes also tried to bury the liquidationists in ridicule. Later on Milton Friedman would recall that at the Chicago where he went to graduate school such dangerous nonsense was not taught--but that he understood why at Harvard-where such nonsense was taught-bright young economists might rebel, reject their teachers' macroeconomics, and become followers of Keynes. Friedman thought that Keynesianism was wrong--but not crazy.

However, the "liquidationist" view carried the day. Even governments that had unrestricted international freedom of action--like France and the United States with their massive gold reserves--tended not to pursue expansionary monetary and fiscal policies on the grounds that such would reduce investor "confidence" and hinder the process of liquidation, reallocation, and the resumption of private investment.

 

[bripat9643]

http://www.j-bradford-delong.net/tceh/slouch_crash14.html

The 'leave-it-alone liquidationists' headed by Secretary of the Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate'.He held that even panic was not altogether a bad thing. He said: 'It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people'

Who the hell is J. Bradford Delong? I said a "classical economist," not some Marxist hack demagogue.

So you managed to find some economist using the term "liquidationist?" Well here's a clue for you: he made it up himself. There's no such term in conventional economics. Prior to the progressives, the standard policy of the U.S. government was to allow the economy to recover on it's own, and it always worked.

And for your further edification: Hoover was far far far from the kind who supported this school of thought. Hoover's Reconstruction Finance Corp was a precursor to Roosevelt's NRA. Hoover intervened massively in the economy. The claim that he was an advocate of Laizzes faire or a "liquidationist," as your demagogue professor calls it, is simply horseshit.

 

[Bfgrn]

http://www.j-bradford-delong.net/tceh/slouch_crash14.html

The 'leave-it-alone liquidationists' headed by Secretary of the Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate'.He held that even panic was not altogether a bad thing. He said: 'It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people'

Who the hell is J. Bradford Delong? I said a "classical economist," not some Marxist hack demagogue.

So you managed to find some economist using the term "liquidationist?" Well here's a clue for you: he made it up himself. There's no such term in conventional economics. Prior to the progressives, the standard policy of the U.S. government was to allow the economy to recover on it's own, and it always worked.

And for your further edification: Hoover was far far far from the kind who supported this school of thought. Hoover's Reconstruction Finance Corp was a precursor to Roosevelt's NRA. Hoover intervened massively in the economy. The claim that he was an advocate of Laizzes faire or a "liquidationist," as your demagogue professor calls it, is simply horseshit.

Hoover used the term liquidationist. And the author didn't invent Hayek's words.

Your attack of the messenger tells me you can't handle the truth.

 

[bripat9643]

http://www.j-bradford-delong.net/tceh/slouch_crash14.html

The 'leave-it-alone liquidationists' headed by Secretary of the Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate'.He held that even panic was not altogether a bad thing. He said: 'It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people'

Who the hell is J. Bradford Delong? I said a "classical economist," not some Marxist hack demagogue.

So you managed to find some economist using the term "liquidationist?" Well here's a clue for you: he made it up himself. There's no such term in conventional economics. Prior to the progressives, the standard policy of the U.S. government was to allow the economy to recover on it's own, and it always worked.

And for your further edification: Hoover was far far far from the kind who supported this school of thought. Hoover's Reconstruction Finance Corp was a precursor to Roosevelt's NRA. Hoover intervened massively in the economy. The claim that he was an advocate of Laizzes faire or a "liquidationist," as your demagogue professor calls it, is simply horseshit.

Hoover used the term liquidationist. And the author didn't invent Hayek's words.

Your attack of the messenger tells me you can't handle the truth.

"Liquidationist" is just a pejorative term meaning someone who advocates laizzes faire. It's not an economic term. Furthermore, Hoover was not an economist.

Hayek criticized credit expansion, not "liquidation." Credit expansion is what the Fed did before the collapse.

 

[Toro]

http://www.j-bradford-delong.net/tceh/slouch_crash14.html

The 'leave-it-alone liquidationists' headed by Secretary of the Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate'.He held that even panic was not altogether a bad thing. He said: 'It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people'

Who the hell is J. Bradford Delong? I said a "classical economist," not some Marxist hack demagogue.

So you managed to find some economist using the term "liquidationist?" Well here's a clue for you: he made it up himself. There's no such term in conventional economics. Prior to the progressives, the standard policy of the U.S. government was to allow the economy to recover on it's own, and it always worked.

And for your further edification: Hoover was far far far from the kind who supported this school of thought. Hoover's Reconstruction Finance Corp was a precursor to Roosevelt's NRA. Hoover intervened massively in the economy. The claim that he was an advocate of Laizzes faire or a "liquidationist," as your demagogue professor calls it, is simply horseshit.

Whether one agrees with him or not, Brad DeLong is a highly respected, pre-eminent economic historian. The fact that one would think he's a "Marxist hack demagogue" says more about the cognitive limitations of the person writing that phrase than anything.

 

[Bfgrn]

“Liquidation” Cycles and the Great Depression

J. Bradford De Long
Harvard University and NBER

The inaction of the United States government during the 1929–33 slide into the Great Depression is both astonishing and puzzling when viewed from any of the perpectives held today. All points of view today hold that governments should strive to provide a stable environment in which the private economy can operate, and should do this by keeping some broad nominal aggregate measure of spending or liquidity on a stable growth path. For monetarist economists, the measure to be stabilized is some definition of the nominal money supply.1 For Keynesians, the appropriate aggregate is total nominal demand itself.2

As the conduct of economic policy while a depression is pending is concerned, these differences of opinion are relatively minor, for they all teach one central lesson: the central bank should pour reserves and liquidity into the banking system as fast as possible3 in order to keep the money stock and demand from collapsing during depressions. Above all, the central bank should not aggravate depressions by unexpectedly imposing contractionary policy on an already weakening economy.

This, however, was not the policy followed during the Great Depression.4 The Federal Reserve did not push reserves into the banking system during the 1929–33 decline. It passively stood by while the nominal money stock fell by a third. The federal govenment did not increase its spending while allowing its tax revenues to fall. Instead, strenuous efforts were made to balance the budget and keep it balanced.

These policies were disastrous. They certainly did not stop the contraction in economic activity. They may well have severely aggravated it, and presumably played an important role in making the 1929–41 depression into the Great Depression.

Alternatives were considered. Factions within the Federal Reserve system did argue for expanding liquidity during the downslide.5 They were overruled by those who thought that the economy needed to go through a period of “liquidation” in order to lay the groundwork for renewed expansion. “Liquidationists” pointed to the short (but sharp) 1921 recession, argued that it had laid the groundwork for prosperity in the 1920’s, and pushed for similar deflationary policies—which they mistakenly hoped would assist the release of capital and labor from unproductive activities, and lay the groundwork for a similar boom in the 1930’s.6

The current of mind that underlay “liquidationism” was not a freak belief held by central bankers and makers of policy alone. Such a “liquidationist” theory of the function of depressions was in fact a common position for economists to take before the Keynesian Revolution, and was held and advanced by economists as eminent as Hayek, Robbins, and Schumpeter. In squeezing an already-weak economy, the makers of American economic policy were to some degree acting as John Maynard Keynes believed that policy makers always act: they were “madmen in authority” obeying voices in the air which were to some degree echoes of academic debates.7 Academic economics gave central bankers a warrant for their contractionary depression-era policies.

In the aftermath of the Great Depression, the intellectual rout of the liquidationists and the victory of the Keynesians was complete. Pre-Keynesian business cycle theory receives less than a footnote in post-World War II macroeconomic texts.8


*I wish to thank John Leahy, Murray Milgate, Robert Waldmann, and especially Barry Eichengreen and Randy Kroszner for helpful discussions, and Hoang Quan Vu for enthusiastic research assistance.

1See Milton Friedman (1984).

2See Robert Hall and John Taylor, Macroeconomics

3 And the fiscal authorities should cut taxes and accelerate spending as much as necessary.

4See among others Milton Friedman and Anna Schwartz, A Monetary History of the United States, Lester Chandler, America’s Greatest Depression, Peter Temin, Did Monetary Forces Cause the Great Depression? and Lessons from the Great Depression, Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression, and Charles Kindleberger, The World in Depression 1929–1939.

5Friedman and Schwartz, Monetary History, Epstein and Ferguson, “Loan Liquidation…“ Temin, Lessons from the Great Depression.

6Barry Eichengreen, Golden Fetters: The Gold Standard and the Great Depression.

7John Maynard Keynes, The General Theory of Employment, Interest and Money (London: Macmillan, 1936).

8One of the few exceptions is Salant (1989).

 

[bigrebnc1775]

http://www.j-bradford-delong.net/tceh/slouch_crash14.html

The 'leave-it-alone liquidationists' headed by Secretary of the Treasury Mellon felt that government must keep its hands off and let the slump liquidate itself. Mr. Mellon had only one formula: 'Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate'.He held that even panic was not altogether a bad thing. He said: 'It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people'

Who the hell is J. Bradford Delong? I said a "classical economist," not some Marxist hack demagogue.

So you managed to find some economist using the term "liquidationist?" Well here's a clue for you: he made it up himself. There's no such term in conventional economics. Prior to the progressives, the standard policy of the U.S. government was to allow the economy to recover on it's own, and it always worked.

And for your further edification: Hoover was far far far from the kind who supported this school of thought. Hoover's Reconstruction Finance Corp was a precursor to Roosevelt's NRA. Hoover intervened massively in the economy. The claim that he was an advocate of Laizzes faire or a "liquidationist," as your demagogue professor calls it, is simply horseshit.

Whether one agrees with him or not, Brad DeLong is a highly respected, pre-eminent economic historian. The fact that one would think he's a "Marxist hack demagogue" says more about the cognitive limitations of the person writing that phrase than anything.

He's a professor from Berkely thats enough to tag him as a left winger.

 

[editec]

Slippery Rock College, PA?

BWA HAHAHAHAHAHA!

That and Bloomsfield was were all the losers went to school when I was in High school.

You know...like the kids who got like < 800 on their SATS back when SATS only went up to 1600?

 

[Truthmatters]

Try as you might guys people like him believe in this crap like a religion.

They will never give it up.

You cant force a horse to drink

 

[bigrebnc1775]

Slippery Rock College, PA?

BWA HAHAHAHAHAHA!

That and Bloomsfield was were all the losers went to school when I was in High school.

You know...like the kids who got like < 800 on their SATS back when SATS only went up to 1600?

Professor DeLong also served in the U.S. government as Deputy Assistant Secretary of the Treasury for Economic Policy from 1993 to 1995. He worked on the Clinton Administration's 1993 budget, on the Uruguay Round of the General Agreement on Tariffs and Trade, on the North American Free Trade Agreement, on macroeconomic policy, and on the unsuccessful health care reform effort.

DeLong, J.Bradford

Anothr one bites the dust

 

[bripat9643]

Whether one agrees with him or not, Brad DeLong is a highly respected, pre-eminent economic historian. The fact that one would think he's a "Marxist hack demagogue" says more about the cognitive limitations of the person writing that phrase than anything.

He's obviously a hack because he keeps talking about the "inaction" of the government during the depression. Nothing could be further from the truth. It's an outright lie. People who lie about the facts are hacks.

 

[bripat9643]

&#8220;Liquidation&#8221; Cycles and the Great Depression

J. Bradford De Long
Harvard University and NBER

The inaction of the United States government during the 1929&#8211;33 slide into the Great Depression is both astonishing and puzzling when viewed from any of the perpectives held today. All points of view today hold that governments should strive to provide a stable environment in which the private economy can operate, and should do this by keeping some broad nominal aggregate measure of spending or liquidity on a stable growth path. For monetarist economists, the measure to be stabilized is some definition of the nominal money supply.1 For Keynesians, the appropriate aggregate is total nominal demand itself.

#1 "Inaction" is exactly the opposite of what Hoover did when he was in office. It's an outright lie.

#2 All points of view emphatically do not hold that governments should keep some broad nominal aggregate measure of spending or liquidity on a stable growth path. two very prominent schools of economics hold that government should simply keep it's grubby paws off the economy. They recommend the gold standard and free banking because those institutions make it impossible for government to interfere.

Your authority is a liar and a hack, as are all so-called "liberal economists."

 

[Toro]

Whether one agrees with him or not, Brad DeLong is a highly respected, pre-eminent economic historian. The fact that one would think he's a "Marxist hack demagogue" says more about the cognitive limitations of the person writing that phrase than anything.

He's obviously a hack because he keeps talking about the "inaction" of the government during the depression. Nothing could be further from the truth. It's an outright lie. People who lie about the facts are hacks.

 

[Truthmatters]

Whether one agrees with him or not, Brad DeLong is a highly respected, pre-eminent economic historian. The fact that one would think he's a "Marxist hack demagogue" says more about the cognitive limitations of the person writing that phrase than anything.

He's obviously a hack because he keeps talking about the "inaction" of the government during the depression. Nothing could be further from the truth. It's an outright lie. People who lie about the facts are hacks.

[ame=http://www.youtube.com/watch?v=XO99nL_at0o]It&#39;s Good to be the king - YouTube[/ame]

 

[bigrebnc1775]

He's a professor at berkely thats enough to make him a liberal with an agenda, not to mention he worked for Clinton

 

[Liberty]

why doesn't the average dumbfuck liberal look at the actual policies of hoover/fdr from the actual data at the time and come to their own conclusions? Economics is NOT about formulas and diagrams its COMMON SENSE. Why do the best economics books focus on theory (Sowell,Hazlitt,Hayek,Mises) instead of formulae? Why do libs ALWAYS instead find someone they can label an "expert?" Are they just too lazy to find the truth? Or too ******* stupid?

 

[Cecilie1200]

“Liquidation” Cycles and the Great Depression

J. Bradford De Long
Harvard University and NBER

The inaction of the United States government during the 1929–33 slide into the Great Depression is both astonishing and puzzling when viewed from any of the perpectives held today. All points of view today hold that governments should strive to provide a stable environment in which the private economy can operate, and should do this by keeping some broad nominal aggregate measure of spending or liquidity on a stable growth path. For monetarist economists, the measure to be stabilized is some definition of the nominal money supply.1 For Keynesians, the appropriate aggregate is total nominal demand itself.

#1 "Inaction" is exactly the opposite of what Hoover did when he was in office. It's an outright lie.

#2 All points of view emphatically do not hold that governments should keep some broad nominal aggregate measure of spending or liquidity on a stable growth path. two very prominent schools of economics hold that government should simply keep it's grubby paws off the economy. They recommend the gold standard and free banking because those institutions make it impossible for government to interfere.

Your authority is a liar and a hack, as are all so-called "liberal economists."

I dunno about hack, but he's certainly a prominent LEFTIST economist.

 

[Cecilie1200]

why doesn't the average dumbfuck liberal look at the actual policies of hoover/fdr from the actual data at the time and come to their own conclusions? Economics is NOT about formulas and diagrams its COMMON SENSE. Why do the best economics books focus on theory (Sowell,Hazlitt,Hayek,Mises) instead of formulae? Why do libs ALWAYS instead find someone they can label an "expert?" Are they just too lazy to find the truth? Or too ******* stupid?

You are asking liberals to think for themselves, independent of any talking points. If they could do that, they wouldn't be liberals.