Can someone educate me on this? Great depression and it's resolution

We are seeing the same scenario play out today just as the money supply overinflated in the 1920's. Although the bubble burst, and many banks went under due to the panic created when a lot of Stock traders could not make their margin calls.

The result, was that getting a loan of any kind after 1929 was impossible. The banks that survived it, refused to loan out money. It was this drying up of the money supply, that turned a burst bubble recession into a full blown depression. This article illustrates as interesting trait. Bernanke lowers rates, and commercial mortgages are still hard to get. The banks are taking these rate cuts, and shoring up their portfolios, and the money the fed is trying to inflate the economy with, is staying with the banks to cover losses.

There is a OTC derivatives meltdown coming, as a lot of bad mortgages are packaged into the entire loan resell business. The bad loans have circled the world, and burned many, even small towns in Norway.

This combined with the falling dollar, is building up to be a perfect storm.
The US has fired it's first "bad pay" message around the world, and it will not survive another.

http://www.bloomberg.com/...

America is sick, call a doctor! Dr. Ron Paul.

Here is a shorter, more concise assessment of the Great Depression.

http://www.mackinac.org/a...

As a cause the Austrian school blames the Federal Reserve for trying to help the Bank of England achieve pre-WW1 gold prices by inflating our own currency. Gold Standard cannot inflate unless other nations are inflating.

The slow cure was the New Deal, and a lot of inflation. Exec. Order 6102 prohibited the use of gold as money, and the government bought it from citizens at $20.67. Within six months Roosevelt raised the price to $35, devaluing the dollar by 41%. This gave Fed Reserve the ability to print more notes.

Talks in depth about The Fed first expanding the money supply in the roaring 20's (the set up) then the banking cartel called in all the 24 hour loans (causing the crash on purpose) THEN THE FED DELIBERATELY CONTINUING THE DEPRESSION by following with years of not printing enough money. Banks not already in the Cartel were bought out for pennies on the dollar, further consilidating the power of the Cartel (that's what I got out of it). Are you sitting down LOL cuz it knocked me over when I heard it! Let us not forget who sits on the board of The Fed: members of the Council on Foreign Relations.

i find the details fascinating (and encourage you to look into this further) but here is a really simple explanation of the great depression.

1) the banks took a lot money out of circulation (deflation)
2) without enough money to go around, bosses could not pay wages and people could not buy goods
3) this forced perfectly viable factories, farms, businesses, etc. to close their doors (leading to massive unemployment/poverty/hardship)
4) USA was dragged into foreign war (this was encouraged by the bankers who financed both sides of WWII)
5) once the US was committed to the war, the banks flooded the economy with the money they had taken out of circulation (inflation)
6) factories and farms could resume business now that they had money to pay wages (remember, there was never a shortage of people willing to work)
7) banks reaped huge profits off the war effort (by financing industry and loaning large sums of money to the government at interest)

similar histories exist for ALL the other wars we have fought in the last century... even in the 19th century, the banks encouraged hostilities leading up to the civil war and then profited by financing the north and south.

i should also point out the eerie similarity of the Strait of Hormuz hoax involving the US Navy and the Iranians. these type of incidents at sea have pulled the USA into many wars. read below:

- the spanish-american war started with the sinking of the uss maine in havanah harbor (but there is still controversy as to who did it, etc.)

- our involvement in WWI happened after the sinking of the lusitania cruise ship (many credible arguments point to an intentional act or even conspiracy between germany and usa to allow this)

- wwii started for us after pearl harbor but there was an earlier incident when japan sank a us navy ship the PANAY in provocation to draw us into conflict (also there are a lot of people who think that FDR knew that pearl harbor was coming and that he allowed it)

- vietnam war/gulf of tonkin incident (need i say more? this was entirely staged but used as the excuse to go into nam)

The truth, FDR made things worse.
http://www.minyanville.co...
http://www.professorfeket...
http://www.professorfeket...
http://www.professorfeket...

For God and Country!

On Rothbards the American Depression I just read this review:

10 of 45 people found the following review helpful:
2.0 out of 5 stars Outdated Economic Interpretation and Political Activism. More Recent Works are More Accurate, June 1, 2006
By T. Carlsen - See all my reviews
(REAL NAME)
This book is outdated by a few decades. Modern quantitative economic studies have considerably advanced our understanding of the Great Depression. Rothbard was famous for rejecting quantitative measurements in favor of philosophy (political activism) which does not compare to later research. For the economics of the Great Depression, I highly recommend the rigorous "Essays on the Great Depression" by Fed Chairman Ben Bernanke or the old (and slightly outdated) "Monetary History of the United States" by Milton Friedman and Anna Jacobson Schwartz" (which helped Friedman win the Nobel Prize in Economics).

Other excellent books on the economics of the Great Depression include the rigorous 1996 "Golden Fetters" by Barry Eichengreen and Harold James. Another groundbreaking book on the economics of the Great Depression was the 1973 "A World in Depression" by Charles Kindleberger that focused on the international aspects (including the gold standard) and presents a sharply different interpretation than Rothbard, but Bernanke's book is even better.

For a reputable historians view of the Great Depression that is critical but of FDR, read David Kennedy's Pulitzer-Prize winning "Freedom From Fear."

Rothbard argues that the Federal Reserve first created inflation with a loose money policy and started the Depression, which was made worse by Hoover's actions to interfere with the natural correcting mechanisms of the economy. Rothbard is correct about the flawed actions by the Federal Reserve, but he does not properly explain the role of the disastrous gold standard in turning the contraction into the truly catastrophic Great Depression. (No surprise since Rothbard was a staunch believer in the gold standard.) The gold standard was a major cause.

Rothbard also does not adequately cover the effects of the massive collapse of the weakly regulated American financial system while Hoover was president and the subsequent contraction of money caused by the sharp drop in lending activity. Over 10,000 banks failed, which was a catastrophe. The banks were THE financial system of the United States at that time. That banking collapse further restricted the money supply when failed banks could not make any loans and solvent banks refused to make loans for fear of losing money.

The American economy would never have recovered from the massive banking collapse and the constrictive gold standard without intervention. The conventional economic thinking of tariffs, balanced budgets, the gold standard, and weakly regulated financial markets was wrong.

The Republican party had long been the party of tarriffs since the Civil War. The Smoot-Hawley tariff was named after two Republicans and pushed by the Republican leadership. Rothbard puts too much blame on Hoover to protect the Republicans. By the way, this is not meant to reflect on the Republicans of today, who generally oppose tariffs.

The Republican leadership back then staunchly supported a sound currency through a strictly balanced budget and the gold standard, along with high tariffs, which we now know was a disaster.

The Depression could not have ended - and did not end - until the disastrous gold standard was eliminated by FDR. The monetary contracton related to the gold standard and the banking collapse, which contracted loans and more money further, were the main causes.

With no disrespect to Rothbard or his views in general, this outdated dinosaur book on the Great Depession is simply outdated.

Any rebuttals.

Depressions don't end because of things we do to manage them. They end because debts are liquidated and balance sheets are reset so that there can be a profit motive going forward. That's the whole reasoning behind Austrian theory - that rather than fearing or postponing depressions, we should welcome them, endure them as a necessary component of clearing away excesses. Someday GM will go bankrupt, the debt will be converted into equity, and a new GM, fully capitalized, ridden of unpopular car styles and properly sized, will rise from the ashes.

make willing soldiers

It gives the chronology of the time and how America exited from this great economic tragedy.

http://www.econlib.org/li...

Here is a chilling excerpt from the explanation that shows what occurred back then:

….”What made matters worse was a big drop in U.S. consumer spending—far more than can be explained by the stock market crash. The drop may have been a backlash to the rise of installment lending (for cars, furniture, and appliances) in the twenties. The prevailing practice allowed lenders to repossess an item if the borrower missed just one payment. People may have stopped making new purchases to reduce the risk of losing things they already had bought on credit. Whatever happened, the slump soon fed on itself. Weak spending depressed prices, which meant that many farmers, businesses, and nations couldn't repay their debts. Rising bad debts prompted banks to restrict new loans and sell financial assets, usually bonds. Scarce credit led to less borrowing, less spending, lower prices, and more bankruptcies. Trade and investment spiraled downward. Confidence crumbled, and as it did, bank runs—people clamoring to convert deposits into cash—ensued.”

Now, do you see the similarities between then and now?

Ditto on the Wall Street Crash, since it is so relevant today and to the topic.

Murray Rothbard's "America's Great Depression" will tell you everything if you take the time to read it :)

www.mises.org/rothbard/ag...