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EarthRider
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i'll take your word for it bro, so what are we suppose to do about it
Lessons from the Depresion of 1920-1921
- Thread starter javaguru
- Start date
javaguru
Banned
It's the free market.....you can't change the market.
clicking on a java thread is pretty depressing in its own right
javaguru
Banned
Yeah, I've heard that before...ignorance is bliss.
Good article. However, I teach Eco and Recent US History. There are some important points you left out. I'm not trying to mess with ya. First, 1920-1921 could not be classified as a depression but a deep recession. The economic downturn did not last long enough to be a depression. Second, it was Andrew Mellon's eco-policy that brought the country out of that recession. In today's terms we would call it, "The Laffer Curve." Hoover was a complete moron, there is no doubt about that one. After, the crash in 1929, he tried "Free Market" policies (which I love). However, simultaneously, he passed the highest tariff in the history of the US (The Smoot Hawley Act). Horrible monetary move, other countries passed retalitory tariffs causing more eco problems. He tried to socialize farming, which was a utter disaster. Caused overpruduction on our main crops. Surplus on crops causes their price to fall. The traditional response of the farmer in relation to having a surplus was selling their crops to Europe, which was stymied by the SH Act. Hence, they had millions of pounds of cotton and other crops stored in vaults, so naturally that created more unemployment in textile and farming industries.
The Fed tighten lending during a depression (bad monetary move) discouraging investment, and the private sector could not afford the loans, (causing more unemployment). The Fed raised interest rates during a depression another stupid move, discouraging businesses, and causing alarming foreclosure rates. People were rushing to banks to withdraw their money causing 1200 banks a year to faulter under Hoover because the Fed refused to supply banks with capital (bad monetary move). The Bank of America failed, maybe, the domino effect theory is not true in relation to Communism, but it certainly seems true in relation to banking. By 1933, 4,000 banks had faultered.
Roosevelt (who I hate), saved the banking system. He declared a "bank holiday" closing all the banks in a America to stop people from withdrawing their money (perhaps unconstitutional). However, it worked.... He made the Fed warrent 100% de facto insurance on money for people that put their money back into banks. It worked, people started putting their money back into banks. The Stock Market reported the highest one day percentage increase in its history. Roosevelt, made the Fed supply banks with unlimited amounts of capital,and lowered interest rates. The banking system was saved, 1934 more and more banks were reopening. Then it tapered off during the thirties.
Hoover, had done so much damage with his erroneous monetary policies, Roosevelt had no choice but to give immediate relief. 25% unemployment by 1933, between 8-9 million out of work and going hungry. However, that is where he should have stopped with his social programs, but he kept going. The New Deal did not bring America out of the depression. That is a whole other debate, but his stimulis for the banks worked....
The Fed tighten lending during a depression (bad monetary move) discouraging investment, and the private sector could not afford the loans, (causing more unemployment). The Fed raised interest rates during a depression another stupid move, discouraging businesses, and causing alarming foreclosure rates. People were rushing to banks to withdraw their money causing 1200 banks a year to faulter under Hoover because the Fed refused to supply banks with capital (bad monetary move). The Bank of America failed, maybe, the domino effect theory is not true in relation to Communism, but it certainly seems true in relation to banking. By 1933, 4,000 banks had faultered.
Roosevelt (who I hate), saved the banking system. He declared a "bank holiday" closing all the banks in a America to stop people from withdrawing their money (perhaps unconstitutional). However, it worked.... He made the Fed warrent 100% de facto insurance on money for people that put their money back into banks. It worked, people started putting their money back into banks. The Stock Market reported the highest one day percentage increase in its history. Roosevelt, made the Fed supply banks with unlimited amounts of capital,and lowered interest rates. The banking system was saved, 1934 more and more banks were reopening. Then it tapered off during the thirties.
Hoover, had done so much damage with his erroneous monetary policies, Roosevelt had no choice but to give immediate relief. 25% unemployment by 1933, between 8-9 million out of work and going hungry. However, that is where he should have stopped with his social programs, but he kept going. The New Deal did not bring America out of the depression. That is a whole other debate, but his stimulis for the banks worked....
javaguru
Banned
Depression and recession are generally subjective, I know three plus years of negative gdp and/or 10% decrease in gdp are the generally accepted academic standards, so I chose to use the term depression as my thread title because it's more provocative.
However, if you look at the deflation of the period one could objectively call it a depression based on the deflation.; It's an issue of metrics.
take your history lesson like a man java!
javaguru
Banned
I'm just sayin "depression" and "recession" are subjective terms and always open to interpretation. Just like your music is open to criticism...
