So you think union rules, tariffs, tax hikes and public works projects like the Hoover Dam caused the stock market to fall 86%? Those things didn't ever cause cause the stock market to drop 86% and unemployment over 20% before or since.
Questions that unfortunately reflect the typical false statist dogma of history and mythical statist Keynesian economic theory taught in the public indoctrination system.
The prior ten years easy money policies and artificial credit expansion of the Federal Reserve inflated the 1929 stock market bubble that inevitably popped. (This is Known as the Federal Reserve Boom-Bust Cycle.)
Yes. Government intervention massively exacerbated and needlessly extended the subsequent "Great Depression", and pushed the unemployment rate up, and prolonged the depression to over ten years. (First under Hoover with the fair trade and fair labor policies, the high wage policies, the increased taxes, the massive pork spending projects, the federal levies, the artificial price supports, the Norris-Laguardia Act, the Federal Reconstruction Finance Corporation, the artificial public credit extensions, the public works projects, the Smoot-Hawley tariffs, the bailouts, and other redistributions and market distortions, followed by the FDR’s equally disastrous New Deal projects). Yes, the artificial wage inflation policies and trade wars and rest of intervention caused the unemployment to rise much higher and last much longer.
Government intervention impeded the free markets ability to regulate the economy back to normal by purging all the bad debt, mal-investment, distorted rate, moral hazards, distorted price signals and wages, over-leveraging, artificial credit expansion, the inflation shifting wealth from workers and saver to speculators, the national debt, the redistribution of wealth, the government regulations, taxes, the excess leverage, the economic infections and poisons, etc.
Is the 1920 comparable to 2020?
Yes, the laws of economics, and free markets apply just the same in 1920s as in 2020. It’s like saying we should ignore the laws of mathematics because 2020 is different from 1920.
Was the average person and business as leveraged in 1920 as 2020? I am going to guess not. And that being the case, how many years will going through bankruptcies last now if things are just allowed to "readjust"?
Nope. Government and Federal Reserve policies through their endless cycles of intervention, artificial credit expansion, distortions, and Quantitative inflation have made the debt load (national debt, unfunded liabilities, corporate debt, consumer debt, student debt and more) far worse now. That is all the more reason why it should be allowed to be purged from the system as quickly as possible.
Will it take one year, two years, or four years if allowed to be properly purged by free market? I don’t know. What is certain, however, is that more government intervention inhibits and prevents theses distortions, and bad debt from being purged. Because the debt and distortions are so much worse now, the effects by government/fed intervention to further distort will magnify, exacerbate and prolonged even longer and worse, and probably far worse than in the 1930s. One, two or five years of pain to cure, is better than ten, twenty, fifty years of pain that doesn’t cure but only makes the economy sicker.
Krugminator’s questions reflect that Krugmninator has zero understanding of the Federal Reserve boom-bust cycles, or Austrian economics. That is wholly unacceptable for someone that has been on this forum for over five years.
Make a little effort to at least educate yourself.
These are filled with free resources. Read them. Take watch seminars. Take the courses.:
The Great Depression :
https://mises.org/search-mises?search=great depression
The Boom Bust Cycle:
https://mises.org/search-mises?search=boom+bust+cycle&sort_by=search_api_relevance&sort_order=DESC
After five years on the forum, there is no excuse for being ignorant of such basics.
